VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
Ukraine posted 2.1% GDP growth compared with the end of previous year (7.6% in 2008). By the results of the second quarter of 2009, the country's GDP in annual estimation dwindled by 18%. The national currency is weakening against a backdrop of the negative balance of payments and a sizeable budget deficit. Ukraine's external debts are also growing rapidly. The International Monetary Fund estimates that the country's public debts and gross external debts will reach 35.4% and 85.4% of the GDP, respectively.
The year on year decline of the industrial production due to plunging global demand for Ukrainian products, obsolete production facilities and high energy consumption totaled 29.6% in January-August 2009.
The engineering, iron-and-steel and chemical sectors also face problems and have downsized production by 52.2%, 39% and 32%, respectively. In January-August 2009, the primary sector of the economy, which is also plagued by problems, posted a 16.8% decline.
The agriculture sector remains stable, posting a 0.4% production increment in January-August 2009. Ukraine is expected to harvest an impressive 42-43 million tonnes of grain. This is 20% less than last year. Plunging global wheat prices have a negative impact on the Ukrainian agriculture sector.
Consumer inflation dwindled due to sharply curtailed domestic demand, totaling 8.2% in January-August 2009. Seasonal deflation was posted in August. At the same time, industrial prices have started to grow again, highlighting reinvigorated demand.
The social sphere continues to face problems. Real wages fell by over 10% in January-August 2009. At the same time unemployment remains static at 9.1% (calculated using ILO methods).
As of July 1, 2009, the Ukrainian economy had accumulated almost $38 billion worth of direct foreign investment. Cyprus tops the list, accounting for 21.2% of total investment, and is followed by Germany (17.2%), the Netherlands (9.8%), Austria (6.6%), the United Kingdom (6.1%) and Russia (5.6%). As of July 1, 2009, Ukrainian investment abroad totaled $6.2 billion.
On May 16, 2009, Ukraine joined the World Trade Organisation and moved to reduce protectionism in its domestic markets. Average customs duties fell by 28%, and those on agricultural products were nearly halved. The Ukrainian Parliament passed a bill introducing 13% customs-duty surcharges on a number of consumer goods, including: cars, clothes, footwear, some food categories and alcohol, for the duration of the crisis. The law was enacted in March 2009 and remained in force until September.
Yulia Tymoshenko's government subsequently yielded to EU pressure and abolished the surcharges on all goods except cars and refrigerators.
The Ukrainian Government is implementing anti-crisis measures which aim to ease tax and tariffs burdens on key economic sectors during the current recession. It has reduced the cost of transporting products made by the ore-mining, iron-and-steel and chemical sectors and has also abolished additional payments for natural gas used by these sectors.
Agricultural producers continue to enjoy VAT benefits. The construction sector has started making considerably smaller local-budget payments. Acting on IMF demands, the Ukrainian Government raised the excise tax on alcohol, tobacco and diesel fuel. Relevant measured have been taken to improve the financial standing of the Pension Fund and recapitalization of problem banks is underway. In an effort to revive the loan market, the National Bank of Ukraine is gradually reducing its discount rate.
