The YouTube channel “Experts Club” has published a new video in which the founder of this think tank, Maksym Urakin, provides his analysis of Ukraine’s macroeconomic indicators and the state of the global economy in the first half of 2023.
Demographic indicators of Ukraine
Speaking about the demographic factor in the development of the Ukrainian economy, the expert cited data from the Opendatabot portal, which shows that the birth rate in the country continues to decline. According to these data, about 97 thousand children were born in the first half of 2023, which is 28% less than in the same period of 2021.
“The birth rate has been declining by about 7% annually since 2013. However, the full-scale war has aggravated the situation, causing the largest crisis in natural population growth. The demography of our country continues to be under pressure due to the current circumstances,” said Maksym Urakin.
According to him, in the first half of 2023, the number of marriages fell by 17% compared to the same period last year, while the number of divorces increased by a third, especially in Kyiv.
Economic recovery
Turning to the macroeconomic sphere, the economist emphasized that the Ukrainian economy has started to show signs of recovery.
“According to the NBU, Ukraine’s economy grew by 18.3% in the second quarter relative to the same period last year. This growth is relative to the period of the greatest decline at the beginning of the war.”, – said the founder of the club of experts.
Nevertheless, Maxim Urakin expressed concerns about the long-term outlook.
“Despite the current positive trend, the main risk for the Ukrainian economy continues to be related to the duration and intensity of the war. This may complicate the recovery, as well as cause problems with inflation and currency exchange rate,” Urakin noted.
According to him, the main negative factors affecting economic activity are a decrease or instability of international aid, as well as possible further destruction of energy infrastructure and problems with electricity supply in the fall and winter period.
Analysis of Ukraine’s foreign trade
Maxim Urakin also drew attention to the factor of growth of the negative balance of foreign trade, which has been noted since the beginning of the war.
“The country’s negative foreign trade balance continues to grow, reaching $9 billion in the first five months of this year, according to Gosstat estimates. This suggests that Ukraine is spending more currency on importing goods than it earns from exporting them. We see a sharp drop in exports of mineral products by 39.3%, ferrous and non-ferrous metals by 21.4%, wood and wood products by 17.7%, machinery products by 18.2%, chemical industry by 21.4% and other industrial goods by 4.1%,” – said the candidate of economic sciences.
However, not all the news in this sphere was pessimistic. Urakin emphasized the growth of food exports by 9.9%, which indicates the potential of the Ukrainian agro-industrial complex, which will probably become one of the main drivers of the country’s economic recovery in the coming years.
As for the balance of foreign trade in services, although still negative, the pace of its reduction gave some grounds for optimism.
“We see that the deficit of foreign trade in services is shrinking, which may indicate a gradual recovery of some service sectors in Ukraine,” the expert concluded.
Ukraine’s financial situation in 2023
However, equally important aspects of the economy, according to the expert, are government debt, international reserves and inflation.
“The country’s public debt continues to increase its volume. By the middle of 2023 he Ukraine approached the mark of 140 billion dollars. At the same time, the International Monetary Fund (IMF) has adjusted its forecasts on the level of the country’s public debt, reducing it from 98.3% of GDP to 88.1% of GDP. Despite this ‘positive’ realistic revision, this level of debt represents a significant burden for the national economy,” Maxim Urakin said.
The main source of financing of Ukraine’s budget, according to the expert, is still related to foreign aid.
“Half of the budget is financed by taxes and fees, while the rest comes from international grants and loans,” he emphasized.
Nevertheless, the country’s international reserves have shown positive dynamics.
“By August this year, Ukraine’s international reserves reached a record $41.72bn, which is 6.9% higher than the previous record. This increase is probably the result of active external financial support,” the analyst said.
As for inflation, it showed a slowdown. “After a record 27% inflation in 2022, this indicator fell to close to 4% in July this year,” Urakin noted.
Thus, the economic situation in Ukraine, according to the founder of the “Experts Club”, continues to be complex and multifaceted, requiring careful monitoring and adaptation of strategies in response to changing conditions.
World economy in 2023: analysis and forecasts
In the last presented studies of the “Experts Club” the economic situation in Ukraine was actively considered, however, according to Maxim Urakin, the dynamics of the world economy also has a significant impact on our country. According to the latest data, the world economy shows stable signs of growth, but there are also certain risks.
“The IMF has recently provided its forecasts for global economic growth. A growth of 3% is forecast for 2023 and the same is expected in 2024. The decisions taken by the US to resolve issues related to the level of public debt, as well as active actions in the US and Swiss banking sectors, have helped to reduce the immediate risks of a crisis in the global financial market. However, as the IMF emphasized, “the balance of risks remains tilted towards a possible deterioration of the economic situation at the global level,” the economist explained.
Inflation continues to be in the center of experts’ attention. Although the IMF lowered its inflation forecast for the current year to 6.8%, expectations for 2024 were adjusted upward.
Based on this information, Maxim Urakin concludes that the global economy is on the way to stabilization, but the situation remains ambiguous due to a number of uncertain factors. It is important for countries and their economies interacting in the global market to monitor changes and prepare for possible challenges.
Economic development in individual countries
According to the founder of the “Experts Club”, the global economy in 2023 is showing mixed results. While some countries are overcoming the effects of the pandemic and are on the path to stable growth, others are facing challenges from internal and external factors.
“The U.S. economy exceeded expectations, posting above-forecast growth. Meanwhile, consumer spending and government spending also showed solid growth, but residential investment continues to decline. China, which is on the road to recovery from the pandemic, showed strong economic growth, although the construction industry continues to experience a crisis. The Eurozone has shown moderate growth, with the region’s largest economy, Germany, facing recession. At the same time, the UK and Japan have positive adjustments to their GDP forecasts. India continues to strengthen its economic position, showing dynamic growth. Meanwhile, Brazil, although showing growth in the current year, expects a decline by 2024,” summarized the expert.
For more details on the situation in the Ukrainian and global economy, see the video on the YouTube channel “Club of Experts” at the link:
You can subscribe to the channel here:
ECONOMICS, EXPERTS CLUB, MACROECONOMICS, REVIEW_OF_ECONOMICS, URAKIN, WORLD_ECONOMY
PJSC “Centrenergo” plans to import coal to pass the fall-winter period of 2023/2024, General Director Andriy Churkin said.
“Completely on our own coal we will not pass this winter. And in the near future, Centrenergo plans to sign contracts with foreign companies. There are already certain developments, I think that within a month there will be a result. We need to reach a volume of at least 80 thousand tons of coal per month,” he said in an interview with Interfax-Ukraine.
According to him, this would be a sufficient reserve, but the company is also preparing to work on gas and fuel oil.
“At Tripilska TPP, for example, there is an opportunity to work on fuel oil. We have already imported it, and I have already asked the technical directorate of the plant to make a trial run on this type of fuel,” Churkin said.
He specified that “the closest and most accessible for us is coal from Poland,” while the company buys fuel oil from PJSC Ukrnafta.
The profit of operating Ukrainian banks in January-July 2023 amounted to UAH 83.2 billion, which is 24.5 times more than in the same period last year (UAH 3.4 billion), Bohdan Danylyshyn, a member of the National Bank of Ukraine Council, said on Facebook on Friday.
This figure is a record high in history: before that, the highest net profit of banks in pre-war 2021 was UAH 39.8 billion, compared to UAH 28.4 billion in 2020 and UAH 36.7 billion in 2019.
In addition, the banks’ profit in July was also a record – UAH 15.5 billion compared to the previous best figures of this year: UAH 14.1 billion in June and UAH 14.7 billion in January.
“Net interest income of banks for 7 months of 2023 amounted to UAH 111.3 billion (+40.7% year-on-year), net fee and commission income – UAH 29.4 billion (+16.3%), and along with the positive result of the revaluation of securities, these were factors in improving the financial results of banks,” Danylyshyn said.
He added that the amount of allocations to provisions for active operations, which in 2022 was the main factor in the deterioration of banks’ financial results (over UAH 120 billion), has remained moderate since the beginning of 2023 at UAH 4.9 billion.
Taking into account the data published by the Council member, in July, net interest income of banks increased to UAH 17.7 billion, net fee and commission income decreased to UAH 3.8 billion, and allocations to provisions increased by only UAH 0.3 billion.
“The return on assets of banks in January-June 2023 amounted to 6.8%, and the return on equity – 67.5%. Positive financial results allow the banking system of Ukraine to demonstrate high capital adequacy ratios, which in July amounted to 24.3% for regulatory capital and 14.8% for the banks’ core capital,” Danylyshyn summarized.
As reported, in 2022, Ukrainian banks reduced their net profit by 3.1 times to UAH 24.716 billion compared to UAH 77.376 billion in 2021.
The International Finance Corporation (IFC), a member of the World Bank Group, plans to resume cooperation with MHP, Ukraine’s largest chicken producer, and provide a loan of up to $30 million to its subsidiary Vinnytsia Poultry Farm LLC to finance the modernization and expansion of the plant’s biomethane production capacity from agricultural waste.
According to the IFC website, the corporation’s board of directors plans to consider this project at a meeting on September 19 this year.
It is noted that the company already operates two biogas plants to process manure from its farms into green energy. As part of its decarbonization strategy, MHP plans to increase biomethane production in Ukraine by modernizing and expanding the capacity of its biogas plants in several stages. The first stage, which will be financed under the project, will serve to demonstrate the viability of liquefied biomethane production.
The total cost of the project is estimated at $52 million, and in addition to the IFC loan, MHP expects to finance it with its own funds. It is also expected that the project will be supported by a $15 million guarantee from the European Fund for Sustainable Development Plus, the UK, and other donors.
It is specified that the construction is planned at a biogas plant in the village of Vasylivka (Haisyn district, Vinnytsia region), which was launched in 2019 and is the largest such plant in Ukraine with a capacity of 12 MW.
At the first stage of the project, it is planned to modernize the existing facilities to produce 14 thousand tons of liquefied biomethane per year, and at the second stage – to expand the capacity to 20.5 MW.
IFC specifies that if approved by the board of directors, this will be the corporation’s sixth investment in MHP since 2003, the last of which was opened in 2014 and closed in 2019.
The corporation also points out that since 2018, members of local communities, with the support of a number of environmental organizations, have complained about the investments of IFC and the European Bank for Reconstruction and Development to the CAO (Compliance Advisor Ombudsman). As noted in the CAO’s materials, despite the efforts of all parties, no final solution was found.
In February 2022, the CAO published its final report and referred the case to the Compliance Department. After the case was suspended in Ukraine in March 2022 due to the full-scale war against Ukraine launched by Russia, the CAO resumed its work on the case on October 17 after consultations with stakeholders.
MHP is the largest chicken producer in Ukraine. It also produces grain, sunflower oil, and processed meat products. MHP supplies chilled chicken half-carcasses to the European market, which are processed, in particular, at its facilities in the Netherlands and Slovakia. In February 2019, the holding completed the acquisition of the Slovenian company Perutnina Ptuj.
The founder, majority shareholder and chairman of the board of MHP is Ukrainian businessman Yuriy Kosyuk.
In the first quarter of 2023, MHP’s revenue increased by 34.7% compared to the first quarter of 2022 to $745.60 million, and net profit amounted to $49.07 million against a net loss of $108.25 million (with a foreign exchange gain of $4.18 million against a foreign exchange loss of $95.32 million).
Trading and production company Agromat LLC has received UAH 52.9 mln of profit (before tax) following the results of January-June 2023 against UAH 10.6 mln of loss for the same period in 2022.
According to IBI Ratings, the company’s net income in the first half of 2023 amounted to UAH 1.3 bln, which is 72% higher than the result of January-June 2022. In addition, Agromat increased retained earnings to UAH 928.3 mln.
In the sales structure for the first half of the year, ceramic tiles accounted for 92% of sales – 2.5 million square meters, while friezes and sanitary ware accounted for 3.5% and 4.2%, respectively.
According to IBI Ratings, the long-term credit rating of Agromat’s series G interest-bearing bonds was affirmed at “uaA” with a “development” outlook.
The decision on placement of bonds of series G in the amount of UAH 100 mln with a public offering was made by the meeting of participants of the company in 2021. Maturity of the bonds is from September 25, 2024 to September 27, 2024. The raised funds are planned to be used to organize the work of new stores and increase inventory.
Argomat Ltd. was registered in 1993. It manufactures and sells ceramic tiles and sanitary ware.
According to Opendatabot, the co-owners of the company with 28.65% shares each are Sergei Voytenko, Oksana Reva and Anatoly Tadai. 10.05% belongs to Olga Bashota and 4% to Nadezhda Rusheliuk.
Agromat has 27 stores and a wide dealer regional network.
The company’s revenue in 2022 decreased by 23.3% to UAH 2.148 bln, while net profit almost doubled to UAH 70.4 mln compared to UAH 132.5 mln in 2021.
The Asset Recovery and Management Agency (hereinafter – ARMA) has opened the Unified State Register of Assets reestr.arma.gov.ua, which are seized in criminal proceedings, with about 36 thousand entries relating to assets transferred to ARMA’s management.
“Understanding of the amount of seized property in our country has been hidden from the public until now and was one of the most closed and highly corrupt areas. ARMA is now reporting on the formation and opening of a register of seized assets, which reflects data on all seized material evidence of economic value,” said ARMA Head Olena Duma at a press conference in Kyiv on Friday.
According to her, the registry is a comprehensive database of all assets in Ukraine that have been seized by law enforcement and courts in criminal cases.
It specifies that it contains information on who is investigating the criminal case, who seized the assets and when, how ARMA manages the property, how much it was valued, how much it was sold for at auction, under what contract it was transferred to the manager, and how much money the management received from the budget.
“That is, the Register makes it possible to track all actions online from its arrest to the state’s receipt of income,” Duma said.
According to the agency, the registry consists of an open part, accessible to every interested person, and a closed part, which is intended for law enforcement. The database contains more than 129 thousand records. In addition to 36,000 records of assets transferred to ARMA’s management, it also contains 829 records of asset valuation activities and 1,144 records of competitive selection of managers.
Another 117 records relate to management agreements and contain data on the amount of income that managers transfer to the budget, and 500 records each relate to assets sold at auction and cash management activities, including the amount of funds placed and interest accrued.
It is specified that the information to be entered into the system from other state registers and databases, primarily the Register of Court Decisions, is organized into different categories, such as movable and immovable property, transport, corporate rights, intellectual property, funds and property complexes.
In particular, the database provides 7,557 entries in the real estate category, 6,253 in the land plot category, 38574 in the transport category, 6,215 in the shares in the authorized capital category, and 8,324 in the monetary assets and banking metals category.
The opening of the Register is in line with the open data policy and the practice of the European Asset Recovery and Management Offices (ARO/AMO), ARMA emphasized.
The agency emphasized that it has made significant efforts to ensure data security, especially in relation to strategic assets and critical infrastructure. In particular, thousands of records have been checked to prevent the disclosure of information about military facilities, and information on the name and description of critical infrastructure assets has been restricted.
“From now on, the public will see the actual results of ARMA’s work over the previous years and will be able to objectively assess how effective these efforts were,” Duma said.
