Ukraine Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

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  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Ukraine Country Risk Report
Product Price
$1,195.00

Core Views:

  • Economic recovery in Ukraine will be sluggish in the years ahead. The country is stepping out of a prolonged period of economic contraction, having experienced two fully-fledged economic crises in the last seven years.

  • It is unlikely that the Ukrainian government will retake control of Crimea and Sevastopol, nor the occupied parts of the Donetsk and Luhansk regions.

  • Ukraine will only meet part of the major structural reforms that are required by the IMF through its financing package. The Ukrainian authorities have already removed most of the gas subsidies and also implemented pension reforms. However, fighting endemic corruption, reforming the judiciary, and improving the banking sector and the business environment will take a slow pace.

  • Despite the new IMF package, Ukraine's FX reserves remain poor. FX reserve levels will also remain under pressure in the long term, as imports will outpace exports again in 2016 and beyond.

  • Russian President Vladimir Putin will be happy with Crimea for now, and will not push for annexation in the North East of Ukraine. Ethnic divisions in NE Ukraine not nearly as clear cut as Crimea, and it would benefit Putin to retain a large ethnic Russian influence in mainland Ukraine (enabling him to maintain a direct political stake in Ukrainian affairs). Moreover, Russia's shift of its attention to Syria will benefit Ukraine, whilst both Moscow and Kiev have urgent economic needs to end the fighting in eastern Ukraine.

Major Forecast Changes:

  • We have adjusted our current account forecasts, as we expect the current account deficit to increase more rapidly in the coming years.

Key Risks To Outlook:

  • The government has pursued an impressive reform agenda, which has arguably achieved more than any other administration in Ukraine's post-Soviet period. However, continued support from the IMF remains contingent on the reform drive sustaining momentum. Faltering progress could lead to delayed disbursals or even suspension of the programme. Such an outcome could have catastrophic implications for Ukraine, which has dangerously low FX reserves to maintain financial stability.

  • A poor harvest in 2015 will weaken corn and wheat exports in 2016 and 2017. In addition, Ukraine has lost nearly 50% of its steel production due to heavy fighting in the country's easternmost parts. Taking also declining steel prices into account, overall exports will only recover moderately from the recent contraction in the years ahead. These developments are likely to put renewed pressure on Ukraine's current account deficit, as imports will be grower at a faster rate in 2016 and beyond.

  • The hryvnia devaluation in 2014 and 2015 has led to a sharp deterioration in bank asset quality, which will remain in a poor state for the foreseeable future. Weak government finances and low private interest will restrain more comprehensive recapitalisation. This will make more bank resolutions highly likely while private sector interest in recapitalisation is expected to remain low.

Macroeconomic Forecasts (Ukraine 2013-2017)
Indicator 2013 2014 2015f 2016f 2017f
f= BMI forecast. Source: National sources, BMI
Nominal GDP, USDbn 177.8 99.0 91.5 99.4 103.1
Real GDP growth, % y-o-y 0.0 -6.9 -10.9 0.9 2.8
Consumer price inflation, % y-o-y, eop 0.5 24.9 49.0 8.5 5.5
Exchange rate UAH/USD, eop 8.24 15.82 23.30 26.00 28.00
Budget balance, % of GDP -4.3 -4.6 -4.3 -4.1 -3.2
Current account balance, % of GDP -9.3 -5.4 -1.4 -1.8 -2.2
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
On Track With Reforms, Yet Many Challenges Ahead
8
Long-Term Political Outlook
9
Eastern Separatism To Persist; Reforms To Face Bumpy Path
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Contraction To End But Sluggish Growth Ahead
14
TABLE: GDP By Expenditure
14
Balance Of Payments
16
Rebalancing Running Its Course
16
TABLE: Current Account
16
FX Forecast
19
UAH: Stability Dependent On External Support
19
TABLE: Exchange Rate Forecasts
19
Chapter 3: 10-Year Forecast
21
The Ukrainian Economy To 2024
21
Colossal Structural Reform Needed To See Through The Decade
21
TABLE: Long -Term Mac roec onomic Forecasts
21
Chapter 4: Operational Risk
25
SWOT Analysis
25
Operational Risk Index
25
Operational Risk
26
TABLE: Operational Risk
26
Market Size And Utilities
27
TABLE: Eme rging Europe - Market Size And Utilities
28
International Security Risk
31
TABLE: Emerging Europe - Inte rstate Security Risk
32
Chapter 5: Key Sectors
37
Pharmaceuticals & Healthcare
37
TABLE: Pharmaceutical Sales, Historical Data And Forecasts
38
TABLE: Healthcare Expenditure Trends, Historical Data And Forecasts
39
Oil & Gas
40
TABLE: Oil Production
41
TABLE: Oil Production
41
TABLe: Gas Production
42
TABLE: Gas Production
42
Other Key Sectors
45
Table: Defence and Security Sector Key Indicators
45
Table: Food and Drink Sector Key Indicators
45
Table: Autos Sector Key Indicators
45
Table : Telecoms Sector Key Indicators
46
Table: Infrastructure Sector Key Indicators
46
Table: Freight Key Indicators
46
Chapter 6: BMI Global Macro Outlook
47
Global Macro Outlook
47
China Crisis To Have Far-Reaching Impact
47
Table: Global Assumptions
47
Table: Developed States, Real GDP Growth, %
48
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
48
Table: Emerging Markets , Real GDP Growth , %
49

Assess your risk exposure in Ukraine with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Ukraine with confidence.

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