1 / 46

Ukraine’s economy : outlook for 2003–2004

Ukraine’s economy : outlook for 2003–2004. International Centre for Policy Studies Senior Economist Andrew Blinov Presentation for economic counsellors 10 Dece mber 2002. About the International Centre for Policy Studies ICPS GDP forecast for 2003–2004

ivana-may
Download Presentation

Ukraine’s economy : outlook for 2003–2004

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Ukraine’s economy:outlook for 2003–2004 International Centre for Policy Studies Senior Economist Andrew Blinov Presentation for economic counsellors 10December 2002

  2. About the International Centre for Policy Studies ICPS GDP forecast for 2003–2004 ICPS forecast assumptions for 2003–2004 Impact on different sectors of the economy Impact on financial stability Risks to the ICPS forecast Presentation plan Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  3. About the International Centre for Policy Studies

  4. The International Centre for Policy Studies is an independent research organisation, founded by the Open Society Institute in 1994 Our mission is to promote public policy concepts and implement procedures for public policy formulation in Ukraine We provide the following services: public policy research training for participants in the policymaking process facilitating public dialogue What is ICPS? Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  5. “Economic Research” publications package Custom research and other servicesfor business New products on offer: Research on Ukraine’s middle class Regional trends Information onother ICPS services is available on our website www.icps.kiev.ua ICPS suggests: Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +380 44 236-4477 Web: www.icps.kiev.ua

  6. Quarterly Predictions (a review and forecast of the development of the Ukrainian economy, published quarterly since 1997) Consumer Confidence (quarterly survey of the economic expectations of Ukrainian households) Economic Statistics (monthly table of statistical data important in doing business in Ukraine) New Economic Legislation (annual analysis of the effect of legislative changes on doing business in Ukraine) Policy Studies (research papers on the most important issues of national policy) The “Economic Research” packageincludes: Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +380 44 236-4477 Web: www.icps.kiev.ua

  7. Annual subscription conditions for the “Economic Research” publications package from ICPS: if subscription is taken by 31 December 2002, clients qualify for the special discount price of 1,995 hryvnias + the first issue of Regional Trends publication for free after 1 January 2003 the subscription price will be 2,495 hryvnias Long-term subscriptions qualify for substantial discounts: for three years, pay 5,195 hryvnias (save 30%) for two years, pay 3,995 hryvnias (save 20%) Subscription applications are available and may be submitted via the ICPS website www.icps.kiev.ua “Economic Research” package terms: Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +380 44 236-4477 Web: www.icps.kiev.ua

  8. Analysis of development trends in the Ukrainian economy Overview of quarterly events and their evaluation Quarterly updates of the forecast for economic developments in Ukraine What is Quarterly Predictions? Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  9. Understanding of development patterns of the Ukrainian economy at the macro level Vision of the future dynamic of economic processes in Ukraine Impact evaluation of governmental decisions on the dynamic of Ukraine’s economy Evaluation of changes in the country’s economic activities—GDP forecast What do we endeavour to deliver to our readers? Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  10. ICPS has been regularly generating an economic development forecast since September 1997 Quarterly forecast updates allow to keep track of new information and trend changes Analysis of all available information Independence ICPS forecast strengths Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  11. ICPS GDP forecast for 2003–2004

  12. In 2002, Ukraine’s GDP will improve by 4.3% 2003 will see growth decelerating to 3.5%… … while in 2004 it will bounce back to 4% ICPS dampens its vision of economic development for 2002–2004 Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  13. Real GDP index, seasonally adjusted, Q1’95=100 Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  14. Comparison of the previous forecast and its updated present version Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  15. ICPS forecast assumptions for 2003–2004

  16. Worsened assumptions about public policy developments: short-term interests will prevail over any long-term vision of public policy government decisions will be impossible to approve Forced redistribution of property in the course of political struggles Downgraded forecast for GDP of Ukraine’s trading partners ICPS downgraded its forecast following a review of assumptions Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  17. Efforts of individuals involved in approving decisions are squandered in political struggles, instead of devoting them to national policy development Divergence of opinions regarding political issues dominate over any agreement of opinions regarding economic policy Business representatives are directly involved in the political struggle and cannot influence this choice The old command-administrative methods of decision making do not work under conditions of political competition Public trust in the government is dwindling Reasons for a less optimistic view of Ukrainian government policy Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  18. Capital losses: Higher risks to domestic investments Capital outflow from Ukraine and insignificant volumes of foreign direct investments coming in Increased costs of private and public external loans Consumer pessimism: Worsened social expectations and consumer confidence Decreased household incomes and decelerated consumption Impact on the dynamic of the Ukrainian economy Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  19. Political interests and big business are juxtaposed Immaturity of the stock market and lack of relevant legislation hamper a civilised transfer of property Forced redistribution of property leaves no opportunity for investors to recoup invested money Forced redistribution of property hinders investment Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  20. GDP, consumption and investmentannual % change Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  21. Consumer confidence index Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  22. GDP of Ukraine’s trading partners and export growthannual % change Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  23. Impact on different sectors of the economy

  24. The highest risks come from sectors where public property dominates and where hefty cash flows are concentrated: electricity, gas, and water production and supply pipeline and railway transport communications Sectors producing investment goods and services, specifically, machine-building and construction, will incur losses Highly competitive sectors, like trade and automobile transport, will be less affected Downgraded forecast will have a varying impact on different sectors Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  25. Competition % of respondents Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  26. Trouble-free market entry and exit reduce investment risks Highly competitive markets and those with a measurable share of private enterprises are more attractive Possibilities of mitigating investment risks Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  27. Ownership % of total number of enterprises Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  28. Forecast across sectors real % change Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  29. Impacton financial stability

  30. Exchange rate UAH/USD Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  31. In 2002, the nominal UAH/USD exchange rate has not undergone any noticeable changes, due to the following: a higher than forecasted positive balance of foreign trade a high rate of transfer receipts The worsened balance of payments will cause a slow nominal depreciation: by the end of 2003, the exchange rate will attain 5.55 UAH/USD, while in 2004 it will reach 5.69 UAH/USD Real effective exchange rate will be kept at a stable level Depreciation will resume Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  32. Current account balance andtrade balance of goods and services millions USD Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  33. In 2003–2004, the foreign trade balance will be shrinking, although slower than we had forecasted earlier: goods exports will grow at a slower pace, due to the more sluggish GDP growth of Ukraine’s trading partners goods imports will climb up less briskly, in view of decreased consumption and investment; the growth will be more vigorous than for exports services imports will enlarge in the wake of capital outflows Trade balance will shrink at a slow pace Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  34. Gross reserves accumulation and payments on the state debtmillions USD Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  35. Remonetisation will persist: in 2003–2004, money mass indicators will advance to 30% Money market and lending activities Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  36. Growth of monetary aggregates % y-o-y Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  37. Remonetisation will persist: in 2003–2004, money mass indicators will advance to 30% Money market and lending activities Excessive liquidity is forcing banks to cut interest rates on loans, with deposit interest rates being simultaneously reduced Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  38. Alternative money value % per annum Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  39. Remonetisation will persist: in 2003–2004, money mass indicators will advance to 30% Excessive liquidity is forcing banks to cut interest rates on loans,with deposit interest rates being simultaneously reduced Money market and lending activities Lending volumes will increase more sluggishly, because of diminished investments and capital outflows Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  40. We forecast that consumer prices will pick up in 2003–2004, by 6% and 5.5%, respectively Price growth factors: moderate increases in tariffs for electricity and public utilities pressure from growing producer prices Deflation will cease Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  41. Price index dynamics % annual change Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  42. Risks to the ICPSforecast

  43. The situation will be markedly worse than our forecast in the event of: Risks Possible implications 1. A rapid shift of the economy into the “shadow” 1. An abrupt slump of budget revenues 2. Financing of the budget deficitat the expense of NBU loans (e.g., via bonds) 2. Frozen contacts with international financial organisations, high inflation 3. Sanctions imposed by theFATF, UN, and the USA 3. Impossibility of external loans, blocking of foreign economic settlements 4. Abrupt deterioration of the world economy in the wake of global political instability and frequent terrorist incidents 4. A steep price increase for oil and other resources; decelerated dynamic of Ukraine’s economy Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  44. Political forces should separate their political struggles and public policy discussions Political parties should declare their vision of public policy and compete to improve the quality of public policy Government analysts who are not involved in the political struggle should prepare justifications of decision options and impact assessments Comprehension of implications will make politicians responsible for opting for certain decision options How can economic development be promoted? Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  45. In November 2002, the idea of forming the Cabinet of Ministers on the parliamentary majority basis has been realized Yanukovych’s Cabinet has to bring itself to shift from its policy of hasty decisions to strategic long-term judgments In order not to become a one-day government, the Cabinet of Ministers should: make sure each decision maps into government strategy introduce middle-term budget planning determine priorities provided with sufficient financing make government activities transparent in order to gain people’s and business confidence sketch in the extent of state support to business New government formed Міжнародний центр перспективних досліджень International Centre for Policy Studies Tel. +38044 236-4477 Web: www.icps.kiev.ua

  46. Thank you for your attention!

More Related