The National Bank of Ukraine (NBU) is recording the adaptation and gradual recovery of the economy after its collapse in the first weeks of the war, said Volodymyr Lepushinsky, director of the NBU’s Department of Monetary Policy and Economic Analysis.
“It’s hard for the economy, but it adapts and works. As the main destructive factor – the Russian occupiers – is eliminated, it is recovering. If in March 10 regions and Kyiv were covered by occupation and active hostilities, which produced 55% of GDP, now it is six regions and 20% of GDP, respectively,” he wrote in a column published on the website of the Interfax-Ukraine agency on Friday.
Among the main processes that indicate recovery, Lepushinsky called the almost halving of the number of enterprises that completely stopped their activity – from 32% to 17%, although 60% of enterprises are still operating below the pre-war level of workload.
According to the NBU operational surveys, almost a third of enterprises now do not experience problems with a lack of resources at all, and 48% of those surveyed will have enough available resources for more than a month, thus, compared to March, the share of businesses in which stocks have run out has decreased.
Lepushinsky added that metallurgy is starting to work, mechanical engineering is being activated, the food industry is operating at full capacity in relatively calm regions and is being restored in the liberated territories.
According to him, the labor market is gradually recovering, although the number of job seekers is growing faster than the number of vacancies, which leads to lower wages. “Less wages are an unpleasant consequence of the war. However, now it is important that the labor market is functioning and allows businesses to adapt and find workers,” said the representative of the regulator.
He also pointed out that the National Bank will continue to pause in the publication of the Inflation Report with a macroeconomic forecast until the economic situation normalizes.
“War is almost the only good reason to pause macroeconomic forecasting. Given that additional sources of uncertainty are attached – the duration and consequences of hostilities – it is impossible to make accurate forecasts today,” Lepushinsky explained.
According to him, in order to keep abreast, the NBU has stepped up work on the search and processing of alternative data, as the number of official data has narrowed.
“With the current intensity of events, only the most obvious trends that determine the development of the economy should be determined. After the uncertainty is reduced, forecast scenarios will be “strung” on such trends,” wrote the director of the NBU’s Department of Monetary Policy and Economic Analysis.
He clarified that the National Bank expects that GDP will fall by at least a third this year, and losses could be greater if active hostilities drag on.
One of the reasons for this fall Lepushinsky called the destruction of the most important infrastructure, production, real estate and valuable movable property. According to the latest NBU estimates, the loss of physical capital is about $100 billion, or half of Ukraine’s total GDP for 2021, the column notes.
Among other factors, the author named the lack of internal sources for such a significant increase in capital, although he considers it quite reasonable to hope for external sources both at the expense of confiscated Russian assets and thanks to the support of international organizations, the EU and bilateral assistance from countries.
Lepushinsky pointed out the labor force as another reason, since, according to UN estimates, 5 million people left the country, and at the initial stage of recovery, due to the disruption of communications, the destruction of production and logistics, the demand for labor will be low, which will lead to a high level of unemployment and put pressure on wages.
“However, with the resumption and growth of production capacity, the situation will change: the demand for labor will grow and lead to higher wages. An important role will be played by measures to stimulate the return of migrants to Ukraine, for example, through tax incentives and retraining measures,” the NBU representative said.
UN Secretary-General António Guterres announced the Organization’s plans to double support for Ukrainians under the conditions of war.
“I was moved by the resilience and bravery of the people of Ukraine. My message to them is simple: We will not give up. The UN will redouble its efforts to save lives and reduce human suffering. In this war, as in all wars, the civilians always pay the highest price,” Guterres said on Twitter on Friday.
As reported, the UN Secretary General arrived on a visit to Ukraine on Wednesday evening, and on Thursday morning he visited the liberated cities of Kyiv region to the north-west of the capital.
The tangible shortage of fuel at filling stations in certain regions of Ukraine, which formed this week, is associated with the enemy’s destructive strikes over the past three weeks on the fuel infrastructure of Ukraine, but this shortage will be eliminated within a week, said First Deputy Prime Minister – Minister Economics Julia Sviridenko.
“Over the next seven days, the deficit will be eliminated, since the operators have contracted volumes in Western Europe and now we are solving the issue of how to import them to the territory of Ukraine as quickly as possible,” she wrote on her Facebook page on Friday.
Sviridenko noted that this situation will lead to a slight increase in the price of oil products. “This is primarily due to the higher cost of logistics due to complex routes and the use of several modes of transport,” the First Deputy Prime Minister explained.
Speaking about the situation on the market, she pointed out that since the beginning of the war, through the Ministry of Energy and the Ministry of Economy, the government has been cooperating on a daily basis with market operators to provide the population and enterprises with oil products. Decisions were made that significantly reduced the impact on the economy of a sharp rise in the cost of petroleum products on world markets, in particular, the excise tax was canceled and VAT was reduced from 20% to 7%.
At the same time, Russia, as an aggressor country, is trying to stop the Ukrainian economy by creating an artificial shortage of fuel, Sviridenko noted. And the destruction of the Kremenchug oil refinery, which was the main producer of fuel in Ukraine, as well as a number of oil depots of market operators with a significant supply of fuel, led to a temporary shortage, which will be eliminated within a week.
As reported, currently the prices for gasoline and diesel fuel are limited by the government to UAH 34.10/l and UAH 38.7/l, respectively. However, according to the director of the consulting group A-95 Sergey Kuyun, the shortage of fuel determines its real price on the market at 40 hryvnia/l and 45 hryvnia/l, despite the government’s setting of marginal prices.
Head of Tesla Inc. Elon Musk, in addition to Starlink satellite Internet stations, donated Tesla Powerwall solar panels to Ukraine.
“Today, two outpatient clinics in Borodianka and Irpin have received Tesla Powerwall solar panels and energy saving systems,” Deputy Prime Minister – Minister of Digital Transformation of Ukraine Mykhailo Fedorov said on Telegram.
According to him, these solar panels and generators have become very popular in America.
“The Powerwall energy system has high autonomy and provides backup power in case of power outages. This ultra-modern equipment will help Ukrainians in the areas most affected by the Russian occupation,” Fedorov stressed.
Dutch Embassy resumes its work in Kyiv, said the Ministry of Foreign Affairs of the Netherlands.
“Today the Dutch embassy will reopen in Kyiv. Ambassador Jennes de Moll and a small team will work closely with Ukrainian authorities and partner countries on the ground,” the ministry said on Twitter Friday.
The Embassy said that the consular section of the embassy remains closed.
The international developer Nhood offers premises for rent in Retail Park Petrivka (Kyiv), Hanna Koriahina, the COO of Nhood Ukraine, told Interfax-Ukraine.
“There are options for retail, warehouse and office real estate. Premises ranging from 400 to 1,400 sq m are offered for rent. The possibility of splitting lots, depending on the purpose,” she said.
According to the expert, the total area of Retail Park Petrivka opened in April 2018 is 12,000 square meters. The second stage was to be 7,100 square meters, but its implementation is frozen.
Nhood is a global real estate player. It brings together the real estate competencies and know-how of 1,029 experts from 10 European countries to continuously rebuild and transform a portfolio in the management of nearly 300 commercial properties across Europe.
Nhood Ukraine (until February 2021 Ceetrus Ukraine) is an international developer of shopping centers and retail parks in Ukraine. It manages five existing shopping galleries and a retail park. Three major projects are under development: Rive Gauche and Retail Park 2 (both – Kyiv), as well as the OVI shopping center (Odesa) – with a total area of more than 200,000 sq m.
