November 2016 happened to be full of good news and achievements for Ukraine and its economy. No months of the year goes without such achievements. The situation seems to be changing for the better on a regular basis.
In November 2016, the Supreme Military Court at The Hague recognized the Russian takeover of the Crimea on 2014 a military conflict. The Ukrainian were looking forward to Russia’s reaction to this court decision. At the same time, the Ukrainian government simplified the conditions for conduction a business in Ukraine. However, there was a pause in the Ukraine-IMF talks due to the government’s inefficiency in fighting corruption to get a loan. Along with political changes in Ukraine, there were some economic changes as well. Let’s take a closer look at them:
To start with, Ukraine’s GDP increased by 1.8% over the reporting period relative to the same period 12 months ago. As for the quarter-to-quarter figures adjusted for seasonality, they improved by 0.4%.
According to Ukraine’s official statistics office, the real GDP increased by 1,8% in Q3 2016 as opposed to the same period 12 months before. For the sake of comparison, the previous quarter indicated 1.4% quarterly growth.
Over the first 9 months of 2016, foreign investments in Ukraine increased by 1.9%. In absolute terms, foreign investors invested over 6 billion dollars in the Ukrainian economy over the reporting period. This is confirmed by Ukraine’s official statistics office.
It’s also interesting to note that the public investments taken form Ukraine’s budget increased by 305 over the same reporting period. They reached 180,2 billion UAH. Regional budgets increased their investments by 80% up to 9,881 billion UAH. Over the reporting period, Ukrainians spent 19,7648 billion UAH on construction of residential property, which is a 12.5% increase.
In January – September 2016, the total amount of capital investments reached 204,450 billion UAH, which is 27,2% more than 12 months before. It’s important to underline that 96,7% of the investments were made in hard assets. The construction sector makes up for 46,9% of the investments, equipment and technique – around 45%, soft assets – 3,3%.
Mid-scale and big-scale Ukrainian businesses increased their profits by 16% over the first 9 months of the year.
The German-Ukrainian Fund (GUF) is ready to invest in Ukrainian mid-scale and small-scale business 18 million euros. The National bank of Ukraine came up with the development strategy named “МСБ-2020”. Some E.U. politicians welcomed this strategy and asked the GUF to participate in the implementation of this ambitious plan to let Ukrainian businesses access finances easier.
At this point, representatives of the NBU are busy revising the complex plan of Ukraine’s financial development up to 2020.
They are planning to make the revised plan restore the crediting system in Ukraine. To be more specific, new loans are expected to become more affordable and accessible for Ukrainian businesses. Also, they are planning to resolve the problem of bad loans in the local business sector.
In the Paying Taxes 2016 rating, Ukraine went up by as much as 23 positions. The rating measures the degree of how easy it is to pay taxes in the country. All in all, there are 190 countries in the rating. The rating is composed annually by World Bank Group and PricewaterhouseCoopers.
The best taxation systems are those of Qatar and the UAE, with the overall tax burden equal to 11,3% and 15,9% respectively. Ukraine is number 84 in the rating.
Fitch has improved Ukraine’s rating. The experts working for the international rating agency indicate both higher financial stability in Ukraine and its better economic prospects, which is why they upgraded the economic rating for Ukraine for the next year. In particular, the rating improved from “CCC” all the way up to “-B”, with a stable forecast. One of the key reasons is Ukraine’s stronger currency reserves. In particular, the reserves improved by 2 billion dollars all the way up to 15 billion dollars over the first 10 months of 2016.
Also, Fitch Ratings improved their forecast for the Ukrainian economy for 2017 and 2018. The revised forecast anticipates a 2.5% increase and a 3% increase in 2017 and 2018 respectively, instead of 2% and 2,5%. This year, they expect the Ukrainian GDP to grow by 1.1%. However, they don’t expect higher investments in the Ukrainian economy coming from abroad.
At the same time, Fitch Ratings improved the ratings of Ukraine’s 7 major banks. Apparently, this became possible only thanks to a stronger rating of the Ukrainian economy after revision.
In January-October 2016, the amount of completed construction works increased by 15.6% as opposed to the same reporting period 12 months ago. All in all, the contractors’ work over the reporting period is estimated at 51,3 billion UAH. The construction works in the residential property sector increased by 13,6% over the reporting period to 13,6 billion UAH. The activity in the non-residential property sector grew by 18% up to 12.9 billion UAH at the same time.
As for engineering constructions, they increased by 11,7% up to 24,8 billion UAH.
Artyomsalt, a major Ukrainian salt miner and vendor, made nearly 150 million UAH in January-October 2016. The current net profit of 150 million UAH is 60% higher than 12 months ago. The company paid over 192 million UAH in taxes, which is 94% higher than in 2015. Over the reporting period, the salt mines produced 1,35 million tons of salt.
Since early 2016 and up to November, they produced over 209 tons of salt. This is a 115,6% production increase as opposed to the same period 12 months before. The production increase came as the result of higher consumer demand for salt.
In January-September 2016, the import of passenger cars to Ukraine increased by32% as opposed to the same period in 2015. In absolute terms, the import reached 56,9 thousand units.
This information is confirmed by the recent report released by Gosstat, Ukraine’s official statistics office. The report says that the total cost of the cars imported over the period is equal to 988 million dollars. 93,5 million dollars of the mentioned sum was spend on buying used cars in Western Europe.
At the same time, Ukraine keeps on seeing its transportation sector improving as the transportation volume is still growing. According to Gosstat, over the first 10 months of 2016, Ukrainian transportation companies increased their transportation volume by 264 tons by kilometer. This is a 101,3% increased as compared to the same period 12 months before.
At the same time, it is reported that Ukrainian transportation companies delivered 511,5 million tons of cargo over the reporting period. That’s a 3,8% increase as opposed to 2015.
Meanwhile, the sales of electrocars in Ukraine have already tripled this year. The stats show that they are getting increasingly popular in Ukraine. To be more specific, over the first 10 months of the year, Ukrainians bought 1123 electrocars. The stats include both new and used cars. However, the tendency seen over the last few years confirms the fact that new cars are getting more popular.
In January-October 2016, Ukrainians purchased 721 new electrocar while in 2015 it was only 279 units. The EU’s decision to cancel the visa regime with Ukraine turned out to be the key reason for this increase, experts say. The thing is that the import rules changed, which made it possible to reduce the cost of electrocars and increase their popularity with the Ukrainian population.
Also, Ukraine simplified the process of importing cars from non-European countries. From now on, when importing cars from America and Asia, EU certification is not required anymore.
Industrial Production and Transportation
Japanese investors are planning to build a bridge across the Southern Bug in Nikolaev, Ukraine. The construction was discussed in mid-November 2016.
The parties reached preliminary verbal agreements to build the bridge. The final decision is going to be made in 2017. It’s important to note that this bridge is going to be an important part of Ukraine’s logistics and transportation network connecting Europe to the Caucasus and Asia.
At the same time, Ukraine is going to build a new highway to Hungary. This decision was made after the Ukrainian-Hungarian talks on the border infrastructure. This ambitious plan is expected to improve the traffic between Ukraine and Hungary.
Also the parties are going to open another checkpoint on the border between Hungary and Ukraine. For now, they are considering 2 options – reconstructing an old checkpoint or building a new one. For now, there is only one fully functioning check point on the border between the 2 countries.
VINCI Construction France, the leading building and civil engineering company in France, is planning to enter the Ukrainian market in December 2016. The company is planning to start implementing several projects in Ukraine’s road system.
This information was confirmed by the Ukrainian Ministry of Infrastructure. According to the statement, VINCI has been trying to enter the Ukrainian market for the 5th time and has a lot of ambitious plans to build roads and bridges in Ukraine.
Antonov Airlines are ready to open an office abroad. The press service of the company says that since Jnaury 1st, 2017, they open Dreamlifts Ltd., a British branch of Antonov Airlines.
Apparently, this company is going to represent Antonov Airlines in the British market and to become a substitute to the Ukrainian-Russian joint venture.
In November 2016, Uzhmash shipped to the USA 2 components for the Antares rocket carrier. The components were shipped to an American company named Orbital ATK 2.
The press service of the company confirmed that the cargo flights to the International Space Station were resumed in October within the scope of contracts signed with NASA. Until late 2018, they are planning to make 5 launches using the rocket carrier.
Ukraine’s military-industrial facilities are going to modernize Pakistani tanks. The order exceeds 600 million dollars in price. This information is confirmed by the recent press released by the press service of the Ukrainian Department of Defense.
The representatives of Ukraine and Pakistan signed the corresponding agreement not so long ago. The agreement implies technical maintenance and modernization of Pakistani tanks.
At the same time, Ukrainian Railways are going to get 650 new freight cars. The corresponding contracts were signed with the corresponding Ukrainian factories. The first shipment was made in early December. The rest of the cars are expected to be delivered by the end of 2016.
The new freight cars (12-783 series) have got improved bogies. The new construction of the freight cars makes it possible to extend their working life.
A new combustion planned is planned to be built in Kiev. At this point, Kiev Investment Agency is busy having talks with 2 international organizations wishing to act as contractors. The project costs around 500 million dollars. The new plan’s capacities are expected to be enough to recycle 505 of the trash produced by the capital of Ukraine.
Apparently, the combustion plan is going to be built outside of the city. Experts say that the plan may well be built within one of the industrial parks which are currently under construction.
Agriculture and Trade
Over the first 9 months of 2016, Ukrainian agricultural companies exported agricultural products to the amount of 10,4 billion dollars. Along other tendencies, there is one that shows that the European Union increased the import of agricultural products from Ukraine over the reporting period. It’s interesting to note that the agricultural export makes up for 40,25 of Ukraine’s total export.
Over the same reporting period, the agricultural companies made an external trade surplus equal to 7,6 billion dollars. At the same time, EU nations increased the export of Ukrainian agricultural products from 2,7 billion dollars in 2015 up to 3 billion dollars in 2016.
Ukraine exported agricultural products to Asia to the amount of 5 billion dollars. All in all, 45% of the Ukrainian agricultural export goes to Asia.
On top of that, Ukraine is currently on the list of the world’s biggest agricultural exporters. The companies are conquering new outlets. For Ukraine, Asian countries are both importers and potential investors. There are Asian companies interested in this kind of investments.
The trade relations with the EU reached 41%. To be more specific, the external trade turnover between the EU and Ukraine increased by 5% for the first time in 10 months.
Among Ukraine’s trade partners, the EU is number 1. Thanks to the implementation of the free trade zone agreement, the trade turnover between Ukraine and the EU grew by 5% over the first 10 months of the year. The EU is planning to close the trade ties with Ukraine in the near future, including some loyalties for the Ukrainian export.
To be more specific, Ukraine increased the export of meat products. Over the reporting period the local companies boosted the export by as much as 46% all the way up to 199,8 tons of meat.
In terms of money, this is 239,9 million dollars of export proceeds. To compare it with last year’s figures, this was 193.15 million dollars made in 2015. They biggest outlets are Iraq, Netherlands, and Egypt with 27,77%, 11,55% and 11,11% exported respectively.
The Ukrainian Department of Agriculture improved their forecast for the harvest of grains this agricultural year. According to the revised forecast, they expect a record harvest at 64 million tons of grains.
The average yield is expected to reach 44 metric centners per hectare. This is the highest figures in the entire history of independent Ukraine.
Ukraine and the EU keep on building up the volume of their bilateral external trade.
The EU accounts for nearly 41% of the entire Ukrainian export. Over the first 10 months of the year, the turnover increased by more than 5% while the export increased by more than 4%.
Ukraine’s retail sales volume increased as well over the reporting period. It gained 3% as opposed to the previous reporting period and reached 932,9 billion UAH. The stats are confirmed by the official statistics office.
The export if Ukrainian products to the EU increased by 5.2%. This is confirmed by the Euro Commission. This is the result of introducing a free trade zone between the EU and Ukraine.
Over the period of September 2015 through August 2016, the Ukrainian export to the EU grew by 5.2% as opposed to the previous reporting period. The Euro Commission underlines that this is a major achievement given the current difficult economic and political situation in Ukraine.
In 2017, they are going to open a new center to grow nut trees in the Chercasy region. The local authorities are going to invest 10 million UAH in the promising project. The thing is that the climate in the region is favorable for growing various nuts and export the products.
At the same time, Ukrainian agricultural companies have entered the Chinese market with new products. Chinese importers placed the first orders for sugar, pork and oil. The first sales turned out to be the result of Ukraine’s trade mission to China arranged by Ukraine’s UFEB. To be more specific, the vegetable oil was imported directly to mainland China while the sugar and pork went through Hong Kong . As for dairy products, they are less popular with Chinese consumers but still have all chances to conquer the Chinese market over time.
Ukraine and Egypt have signed an export agreement. According to the agreement Ukraine will be exporting beef to Egypt. Ukrainian beef exporters have got the corresponding certificate.
Slovakian entrepreneurs are planning to grow pumpkins in the Dnepropetrowsk region. They are planning to produce pumpkin seeds and export them.
The exports are aimed at European countries. At this point, the project is expected to start with 300 hectares in crops, with a chance of expanding it all the way up to 1000 hectares in 2017.
Slovakian investors have already invested over 1 million dollars in this business. At this point, the business employs 20 people, and they are planning to add 30 new jobs next year.
A German company has opened a seed plant in Ukraine. The business costs 20 million euros. The production facility is named KWS Ukraine.
This is a branch of KWS SAAT SE (Germany). The production capacity is 6000 tons of seeds per year. The module-based construction principle makes the production line easily scalable. This means that the production capacity can be easily doubled if necessary. For now, the products are for domestic use but the plant is planning to export seed to Europe and other regions.
Risoil is investing another 700 million dollars in the construction of a new grain hub. The Swiss company is about to go to the 3rd and 4th stage of the construction process.
We remind you that Risoil Terminal has been under construction since 2014. The facility started was launched in March and has been partially functioning ever since.
A company named Rud has purchased a dairy factory in Genichensk. For those of you who don’t know, Rud is a major Ukrainian producer of ice cream.
At first, the facility is going to be used as a milk hub to collect, store and distribute milk to production facilities. In the future, the company is planning to launch a production line to produce various dairy products for local consumers. The company refines 300 tons of milk a day and produces 150 tons of ice cream. The company is authorized to export its dairy products to the EU.
Ukrainian chicken is going to be exported to Serbia. The form of the corresponding veterinarian certificate has already been approved. In case you don’t know, only certified exporters can export their products to the EU.
Japanese consumers are interested in Ukrainian honey and berries. In November, the representatives of Ukraine and Japan had talks in Japan and discussed the ways to expand their trade relations.
Ukrainian sugar conquers China. Ukrainian sugar refineries are already working on the first orders received from Chinese importers. This information is confirmed by the Ukrainian association of sugar producers.
For now, the companies are looking for direct ways to enter the Chinese market without third parties.
The thing is that this is a challenging process requiring certain licenses. The procedure of getting such licenses is rather complicated and time-consuming, but Ukrainian sugar producers are working on it.
A branch of a Danish agricultural company is about to open another office in Ukraine. Dan-Farm Ukraine is planning to open its office in Zhytomir region in early 2017. This is going to be a big-scale
hog-breeding farm – 25 000 heads. The facility has been under construction since 2014. The construction process is nearing its end. The farm will be launched in early 2017.
The entire cost of the project is estimated at 12 million euros. The company has already invested 100 million euro of the required amount.
Ukraine has exported some wheat flour to the USA for the first time in 5 years. This shipment came as the result of long talks which ended with an agreement. It should be noted that the American market is a relatively closed and tightly regulated market. Before the shipment, the factory producing the flour had to get a certificate confirming the high quality of the flour.
Energy Industry
2 Chinese energy corporations are planning to build several solar power stations in Chernobyl. These are GCL System Integration Technology and China National Complete Engineering Corporation (CCEC). The construction process is planned for the next year.
It’s interesting to note that the capacity of one of those power stations may exceed 1GW, which is twice as high as the entire capacity of all the solar power stations currently functioning in Ukraine.
CCEC is expected to be the general contractor while GCL-SI is going to be the one consulting the contractor, as well as the planner and provider of photoelectric facilities.
«Ozone Іnvestment», a Dutch company, is planning to start utilizing a dump near Lutsk, Ukraine, to produce bio gas and use the gas to generate electricity. By the way, this is company is a branch of Global Health Fіnancіal Resolutіon Servіces B. V. The company is planning to build a gas facility nearby for that purpose.
The gas facility is expected to reduce the discharge of greenhouse gases into the atmosphere and create new jobs. On top of that, the facility is expected to pay 1.2 million UAH annually to the local budget, not to mention taxes.
Ukraine gets the first portion of natural gas from Iran. А-95, a consulting firm, reports that Ukrtatnafta shipped the first portion of gas condensate to the local port on Odessa. This is 13000 tons of gas.
The shipment was made in the second half of October by an Iranian company named NATIONAL IRANIAN OIL COMPANY (NIOC). The good news is that the USA is also going to start shipping natural gas to Ukraine through Poland.
Moreover, Ukraine may become a gas hub for the entire Europe. Ukraine has plenty of gas storage facility to be filled with gas for the entire European Union. This info is confirmed by a memorandum of strategic energy cooperation singed during the Ukraine-EU summit in late November in Brussels.
It’s reported that in order to turn Ukraine into a EU gas hub, the country needs to back the fulfilment of the 3rd energy package approved by the corresponding EU agencies.
American investors are ready to invest 400 million dollars in Ukrainian gas storage facilities. The project is backed by OPIC, which is Overseas Private Investment Corporation. The corresponding information can be found on the official website. This is going to be financed by Goldman Sachs, backed by OPIC.
The Zaporozhskaya nuclear station has installed equipment to use American fuel. Tilting device NT-P3 is installed on a new nuclear fuel hub. The equipment is going to be used to work with new containers used by Westinghouse, a nuclear fuel transportation company.
The equipment is installed and successfully tested by NovaTech experts.
Ukraine is starting to search crude oil in the Black Sea. After a 4-year break, the authorities finally decided to resume the research. The event took place on November 17th. The works are going to be done within the scope of the North-Western part of the Black Sea.
