West of Ukraine unattractive for investments, Ukrainian economy 100-percent dependant on Russia

Read it in Russian

Experts of Free Europe Foundation and United Communications Consulting Company conducted research analyzing investor community’s assessments of the current economic situation in Ukraine and perspectives of investing in the country’s economy. REGNUM introduces a summary of the analysis authored by Free Europe’s managing director Oleg Sapozhnikov and United Communications executive Alexey Bogatyrev.

More than 20 analysts and experts of consulting, investment, rating companies, international economic organizations and structures, as well as commercial banks of EU, Russia, and Ukraine specializing in economic situation in Ukraine (MDM Bank, Zerich Capital, European Bank of Reconstruction and Development (EBRD), Pro-Consulting, Troika dialog, Ernst&Young, International Financial Corporation (IFC), Brunswick UBS, Raiffeisen Bank, Moody’s, Alor, Pallada Asset Management, Finmarket, Lesprom Industry Consulting, Regiongazfinans, Otkritie Brokerage House, Uniastrum Bank, AG Capital, Interfin Capital, Nordbrook, and others) took part in the study. Their assessments in many aspects determine recommendations given to the companies’ clients regarding investments in Ukraine.

Judging by the poll result and expert commentaries, Ukraine is perceived as a country with high political risks, whose economy has a substantial potential. The economic policy of Ukrainian state, according to the research, has not created grounds for the full development of this potential, resulting in country’s lagging behind its neighbors in its rate of economic growth.

Russia and Byelorussia – Ukraine’s neighbors and former Soviet Union republics – restored their level of GDP of 1991 and even exceeded it, while the value of Ukrainian economy amounts to 70% of its 1991 level.

The state and perspectives of Ukrainian economy, according to the research, look vague. In general, a reasonably pessimistic evaluation of the current economic situation and reasonably optimistic assessment of perspectives of its development prevail.

The state of Ukrainian economy is evaluated by half of the experts as stagnation or crisis. Same 50% assess investment climate in the country as unfavorable. 95% of experts called Ukrainian economy closed or partly closed for investments. 60% called South-East of Ukraine most promising region of the country for investments. 0% spoke in such terms of the Ukrainian West. According to the investment experts, the greatest (100-percent) influence on Ukrainian economy has Russia, then follow the EU (60%), US (50%), and GUAM countries (5%). At that, 50% of the experts believe that in the coming 2 years, Ukrainian economic relations with Russia will deteriorate.

Full text of the study is soon to be published by REGNUM.