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

Why you should buy this report

  • 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
×

Sign up to download the Ukraine Country Risk Report

By submitting this form you are acknowledging that you have read and understood our Privacy Policy.

Thank you for your interest

You will shortly receive your free executive summary by email.

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 revised down our 2017 real GDP growth forecast from 2.8% y-o-y to 2.3%.

  • We have revised down our average hryvnia forecasts from UAH25.30/USD to UAH26.80/USD in 2016 and from UAH27.30/USD to UAH27.95/USD in 2017.

  • We now expect average inflation in 2016 and 2017 to come in at 14.5% y-o-y and 11.5%, down from our previous forecasts of 15.0% and 10.5%, respectively.

  • We have revised down our end of period policy rate forecast from 16.0% to 14.5% in 2016.

Key Risks :

  • The government has pursued a 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 leads to delayed disbursals or could even lead to suspension of the programme. Such an outcome will 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 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 growing 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 2014-2017)
Indicator 2014 2015 2016f 2017f
f = BMI forecasts. Source: National Sources, BMI
Nominal GDP, USDbn 100.3 82.4 82.7 91.2
Real GDP growth, % y-o-y -5.7 -9.9 0.9 2.3
Consumer price inflation, % y-o-y, eop 24.9 43.3 11.5 8.0
Exchange rate UAH/USD, eop 15.80 24.00 27.60 28.30
Budget balance, % of GDP -4.5 -1.4 -3.9 -3.4
Current account balance, % of GDP -4.6 -0.2 -1.0 -1.9
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Resolved Political Crisis Paves Way For Recovery
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
10
TABLE: PRIVATE CONSUMPTION FORECASTS
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
11
TABLE: NET EXPORTS FORECASTS
11
External Trade And Investment Outlook
12
Funding Of C/A Deficit Fully Dependent On IMF Loans
12
Outlook On External Position
14
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
14
TABLE: TOP 5 GOODS IMPORTS IN 2015
15
TABLE: TOP 5 GOODS EXPORTS IN 2015
15
Fiscal And Debt Outlook
16
Fiscal Reforms To Bolster Long-Term Stability Of Public Finances
16
Structural Fiscal Position
17
TABLE: FISCAL POLICY
19
Monetary Policy
19
Fading One-Off Effects To Push Headline Inflation Lower
19
Monetary Policy Framework
21
TABLE: MONETARY POLICY
21
Currency Forecast
22
UAH: Short-Term Stabilisation, Long-Term Depreciation
22
TABLE: BMI CURRENCY FORECAST
23
Chapter 2: 10-Year Forecast
25
The Ukrainian Economy To 2025
25
Colossal Structural Reform Needed To See Through The Decade
25
TABLE: LONG-TERM MACROECONOMIC FORECASTS
25
Chapter 3: Political Outlook
29
SWOT Analysis
29
BMI Political Risk Index
29
Domestic Politics
30
New Premier Boosts Poroshenko, But Reforms Face Uphill Battle
30
TABLE: POLITICAL OVERVIEW
30
Eastern Separatism To Persist; Reforms To Face Bumpy Path
32
Chapter 4: Operational Risk
35
SWOT Analysis
35
Operational Risk Index
35
Operational Risk
36
TABLE: OPERATIONAL RISK
36
Economic Openness
37
TABLE: FREE TRADE AGREEMENTS
37
TABLE: TOP FIVE IMPORT PARTNERS & PRODUCT IMPORTS, USDMN
38
Availability Of Labour
42
TABLE: EMERGING EUROPE - AVAILABILITY OF LABOUR RISK
43
TABLE: TOP 10 SOURCE COUNTRIES FOR MIGRANT WORKERS ('000)
44
TABLE: LABOUR FORCE EMPLOYMENT BY SECTOR ('000)
45
Chapter 5: BMI Global Macro Outlook
47
Global Macro Outlook
47
Summer Of Risk
47
TABLE: GLOBAL ASSUMPTIONS
47
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
48
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
49
TABLE: MACROECONOMIC DATA & FORECASTS
51

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.

Your subscription service includes:

  • Delivery of the report in print and PDF
  • Online access for 12 months
  • The functionality to translate your online report into your choice of 10 languages - Arabic, Chinese, French, German, Italian, Japanese, Korean, Portuguese, Russian and Spanish
  • The ability to export data and graphs from the online report directly into your workflow
  • The support of a dedicated Account Manager to answer any questions you might have about your subscription
  • Access to our team of leading analysts who will be happy to answer any questions you might have about the data and forecasts included in this report