The main risks of the new coronavirus pandemic are the additional expansion of the trade deficit and the increase in the cost of external borrowing for Ukraine, Oleksandr Martynenko, the head of the corporate analysis unit at ICU Investment Group, has told Interfax-Ukraine. “Possible restrictions on the movement of people and goods, the deterioration of business sentiment due to an epidemic in China could lead to a slowdown in economic growth in this country. In turn, this may affect the global foreign economic situation, including the demand of countries that are the main foreign trade partners of Ukraine,” he explained.
“Many commodity markets will suffer, as they reflect the expectations of markets for the growth of the global economy as a whole, and these expectations will inevitably worsen in the event of a pandemic. In particular, prices for agricultural exports from Ukraine may also decrease,” Dmytro Khoroshun, an analyst from Concorde Capital, said.
He specified that in Ukraine in the event of an epidemic expansion and a decline in consumption in China, the mining and metallurgy sector (iron ore mining, steel production) could suffer most of all, while a drop in oil prices would be positive for Ukraine. At the same time, the analyst suggested that after the situation with the epidemic/pandemic is resolved, China would dare to further stimulate the economy, which could be a positive factor for iron and steel prices.
At the same time, Martynenko said that the flows of negative information about coronavirus had already done great damage to raw material prices, first of all, oil sagged (about minus 10% since the beginning of last week), followed by copper (5% down) and other metals.
“In the event of a prolonged fight against the virus, the Ukrainian mining and metallurgical complex may suffer due to lower export prices for steel and iron ore. At the same time, a decrease in the world oil prices could compensate for at least part of Ukraine’s losses of export revenue from the mining and metallurgical complex,” the ICU analyst state