Business news from Ukraine

SHARE OF IT INDUSTRY OF UKRAINIAN ECONOMY IS 4% OF GDP – ECONOMY MINISTER

The share of IT industry of the Ukrainian economy is 4% of GDP, First Deputy Prime Minister, Minister of Economic Development and Trade Stepan Kubiv has said.
“Today, the IT sector is 4% of GDP, 150,000 employees with high wages, who form the middle class. In a year and a half they will already be 200,000,” he said at a government meeting on Wednesday.
Kubiv also said that the government intends to support investments in innovations in such areas as the agricultural and industrial complex, the IT industry, aircraft manufacturing, tourism, infrastructure and other sectors.
“Together with the National Bank, we must form the best prerequisites for creating financial projects that will create new high-paying jobs,” Kubiv said.

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LARGE INVESTORS EXPECT UKRAINIAN ECONOMY TO GROW

The members of the American Chamber of Commerce in Ukraine expect the continuation of growth of the Ukrainian economy and the increase of profits in 2019 despite the elections, the co-founder and executive director of Horizon Capital, Lenna Koszarny, has said at a press conference of the organizing committee of Ukraine House Davos.
“We asked the members of our chamber, investors who invested huge money in Ukraine, what they expect in 2019. Some 74% answered growth and profits. That is, they will continue to invest, and these are the investors who understand what is happening in the country, that there will be elections,” she said.
She also noted about raising $200 million to the Horizon Capital investment fund – Emerging Europe Growth Fund III, L.P.
“This is a signal for the market that investors are interested in Ukraine. The investors who entered the fund are $350 billion of total capital,” she said.
Alexa Chopivsky, the Executive Director of Ukraine House Davos, also noted the success of the campaign at the economic forum in Davos.
“Three main conclusions can be drawn from our experience in Davos. First, Ukraine House Davos has created a powerful investment brand. Second, we have opened a window for foreigners and sponsors. Third, we have shown a positive image of Ukraine as a country of creativity, innovations and great opportunities,” the expert said.

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WE NEED TO SWITCH FROM CRONY ECONOMY TO SOCIAL MARKET MODEL – YULIA TYMOSHENKO

Batkivschyna Party Leader Yulia Tymoshenko believes that Ukraine should switch from the crony economy to the social market economy, transform the economic model based on raw materials into the economy of innovative development. “This is a global trend, which was adopted as the basis and the main strategic line, including by the European People’s Party, which member Batkivschyna has been for more than ten years. A harmonious combination of free entrepreneurship with the interests of society is necessary. Today it is obvious that the market cannot be absolutely self-regulating and work in the interests of the public. It has weaknesses in the form of monopolism, ignoring the interests of the development of society, the paradigm that the strongest survives any way,” Tymoshenko said on Friday, September 21, during the presentation of the New Economic Course of Ukraine.
She said that the state should create equal rules for all. “Say “no” to monopolies. They eat any economic system, like any monopoly in any sphere of society’s life. It will be dismantled. We will finish the story with monopolies, including clans,” the leader of Batkivschyna Party said.
Tymoshenko said that the goal for this should be the accelerated economic growth with an annual rate of at least 7%, and the main driving force for all economic changes in the country should be a creative intellectual entrepreneurial class.
The leader of Batkivschyna Party said that the tasks of the monetary policy should be stabilization of the hryvnia, a reduction in inflation, the development of small banks, the introduction of long-term low-interest loans for business, and the control of the National Bank by society.
“And the speculative adventures that have been and are being conducted at the National Bank will be the subject of separate criminal investigations after the change of power: about $13 billion in four and a half years was deduced from the budget of Ukraine, from the banking system of Ukraine on the basis of speculative operations. We got almost as much, a little less, from the IMF [International Monetary Fund]. We need to remove the criminals from the National Bank who killed our currency, destroyed our economy and continue to make money on our grief,” Tymoshenko said.

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UKRAINE AN IMPORTANT INVESTMENT AREA FOR EBRD, BANK ONE OF THE LARGEST INVESTORS IN UKRAINIAN ECONOMY

First Vice President of the European Bank for Reconstruction and Development (EBRD) Jurgen Rigterink believes that Ukraine is an important area of investment for the EBRD and a powerful platform for the implementation of major projects. “I’ve been EBRD first vice president for just nine weeks, and the fact that I am currently on a visit to Ukraine speaks about the importance of your country in our project portfolio. For us, Ukraine is not only an investment area, but also an important platform for cooperation in a number of projects that we are implementing jointly with other international partners,” Rigterink said at a meeting with Ukrainian Prime Minister Volodymyr Groysman in Kyiv on Thursday.
Groysman, in turn, noted that cooperation between Ukraine and the EBRD has the potential for growth.
“The bank is one of the largest investors in the Ukrainian economy, and now we are talking about strengthening cooperation and increasing its effectiveness,” he said.
Rigterink also recalled that the EBRD is now processing a five-year work plan in Ukraine, which includes, among other things, increased funding and in-depth cooperation in specific areas – primarily the work of government banks and the development of the energy sector.
According to Groysman, the Ukrainian government is interested in further cooperation with the EBRD on modernization of the gas transit system, as well as in raising funds to increase natural gas production and develop green energy.
“We are now at the point where the economy will grow and investments will increase. I feel it and I see it. This is the scenario I’m programmed to. The situation as a whole is getting stabilized, and this is a very good signal. Even despite the fact that we are entering the electoral period, the government is ready to ensure a forward movement,” he said.

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EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (EBRD) STATES UNCHANGED ITS FORECAST FOR UKRAINIAN ECONOMY GROWTH AT 3% IN 2018-2019

The European Bank for Reconstruction and Development (EBRD) has left unchanged its forecast for Ukrainian economy growth in 2018 at 3% and expects that the same pace would be retained in 2019, the bank has said in a survey on its website. The bank said that large foreign exchange debt repayments by the public sector falling due in 2018-20 and the forthcoming presidential and parliamentary elections cycle in 2019 represent important risks to the growth outlook.
Continuation of the IMF (the International Monetary Fund) programme is uncertain due to the lacking commitment on the part of the authorities to meet key reform requirements, the bank said.
The EBRD said that the growth of Ukrainian economy remains subdued.
As reported, the World Bank remained unchanged its forecast for Ukraine’s GDP growth in 2018-2019 at 3.5% and 4% respectively.
However, the bank said that if reforms are delayed, growth could drop below current levels in an uncertain macroeconomic environment as financing risks rapidly increase and GDP growth could slow to 2%.
The IMF retained its forecast for Ukraine’s GDP growth in 2018 at 3.2%, while it reviewed downwards the forecast for 2019 to 3.3% from 4%.
The National Bank of Ukraine (NBU) predicts that Ukraine’s GDP would accelerate in 2018 to 3.4% from 2.5% in 2017 and slow to 2.9% in 2019-2020.

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OPEN DATA BRINGS OVER $700 MLN TO UKRAINE’S ECONOMY IN PREVIOUS YEAR

Open data in 2017 brought more than $700 million, or 0.67% of GDP, into the economy of Ukraine, according to a study conducted by the Kyiv School of Economics (KSE) in partnership with the London-based Open Data Institute. “If Ukraine continues to work with open data, in particular publish datasets from government decree No. 835, then economic benefits from open data until 2025 will be up to $1.4 billion, or 0.92% of GDP,” said KSE member Artur Kovalchuk, who is one of the authors of the study.
The study finds that today about 3,000-4,000 people directly work with open data, and its further development will translate into the need for personnel with experience in collecting, analyzing, using data.
In addition, Project Manager of the USAID/ UK aid-funded Transparency and Accountability in Public Administration and Services program /TAPAS Petro Matiaszek says that according to the research, the potential of open data in Ukraine is fully comparable with that of the EU. Thus, a recent study by Capgemini for the European Commission estimates direct effects from opening authorities’ data in the EU countries by 2020 vary within 0.37-1.58% of GDP (EUR 55.3 billion).
The study “Economic Potential of Open Data for Ukraine” was conducted with the support of the State Agency for E-Governance and is the first attempt to assess the direct economic effect of opening government data and the potential created by such data for the national economy.
The findings of the research, methodology and other data are available at tapas.org.ua.

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