Business Monitor International


Ukraine Business Forecast Report

Published 24 September 2014

  • 49 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Ukraine Business Forecast Report

Core Views:

  • EU/IMF financing package will require reforms, including: FX liberalisation (although this is likely to be implemented in stages), partial removal of gas subsidies and potentially pension reform. An emergency financing package without conditions may be provided in order to prevent default in 2014.

  • Russia will not relinquish Crimea, although whether that's part of a semi-independent state (e.g. Transnistria, Abkhazia etc.), or more formally part of Russian Federation is hard to call. To limit fallout with the West we think the former, but recent vote by Crimean parliament to join Russia may push their hand. We see political risks as likely to threaten growth over the next 12 months, as the government is forced to decide over closer relations with the EU or Russia.

  • Putin will be happy with Crimea for now, and will not push military intervention into 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).

Major Forecast Changes:

  • We have downgraded our outlook for real GDP growth for 2014, and now expect GDP to contract by 4.1% in 2014. This change reflects our expectations for hryvnia devaluation and concomitant impact on household purchasing power, the Crimean conflict dampening fixed investment and expectations of a retrenchment in government spending.

Key Risks To Outlook:

  • A sharper than expected devaluation could trigger major shockwaves through the domestic economy, particularly within the financial sector which has barely recovered from the 2008 devaluation. Existing capital buffers may prove insufficient to deal with a devaluation of 30% magnitude or greater.

  • We see huge challenges surrounding the ability of the interim government to pass the unpopular reforms required to gain access to a full IMF/EU funding package. Removing gas...

Table of Contents

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 Ratings
7
Domestic Politics
8
Kiev-Moscow Talks Signal End-game In Sight
8
Table: Political Overview
8
Long-Term Political Outlook
9
Eastern Separatism To Persist, While Myriad Other Risks Loom
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
On The Brink Of Economic Collapse
14
Tab le: Economic Acti vit y
14
Balance Of Payments
16
Reforms Needed To Restore Sustainability
16
Table: Current Account
17
Fiscal Policy
18
Debt Restructuring Looking Increasingly Unavoidable
18
Table: Fiscal Policy
18
Exchange Rate Policy
20
UAH: Time Running Out To Secure Stability
20
Table: UAH Currency Forecasts
20
Chapter 3: 10-Year Forecast
23
The Ukrainian Economy To 2023
23
Colossal Structural Reform Needed To See Through The Decade
23
Tab le: Long-Term Mac roec onomic Forecasts
23
Chapter 4: Business Environment
27
SWOT Analysis
27
BMI Business Environment Risk Ratings
27
Business Environment Outlook
28
Introduction
28
Institutions
28
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
28
TABLE: BMI LEGAL FRAMEWOR K RATING
29
Infrastructure
30
TABLE: LABOUR FORCE QUALITY
30
TABLE: EMERGING EUROPE - ANNUAL FDI INFLOWS
31
TABLE: TRADE AND INVESTMENT RATINGS
32
Market Orientation
33
Chapter 5: Key Sectors
35
Telecommunications
35
Table: Telecoms Sector - Mobile - Historical Data & Forecasts
36
Table: Telecoms Sector - Wireline - Historical Data & Forecasts
37
Shipping
38
Table: Major Ports Data
42
Other Key Sectors
45
Table: Oil and Gas Sect or Key Indicators
45
Table: Pharma Sect or Key Indicators
45
Table: Defence and Security Sector Key Indicators
45
Table: Infrastructure Sector Key Indicators
46
Table: Food and Drink Sect or Key Indicators
46
Table: Autos Sector Key Indicators
46
Tab le: Freight Key Indicators
46
Chapter 6: BMI Global Assumptions
47
Global Outlook
47
Eurozone Downgrade On Poor Q214
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

The Ukraine Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Ukraine and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Ukraine's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Ukraine's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Ukraine's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Ukraine, including currency volatility, the commodity price boom and protectionist policies.

The Ukraine Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Ukraine economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Ukraine through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Ukraine Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Ukraine and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Ukraine, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Ukraine over the next 5-years?

BMI's Ukraine country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Ukraine Market - Political Strengths, Weaknesses, Opportunities and Threats facing Ukraine.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Ukraine's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Ukraine's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Ukraine, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Ukraine's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Ukraine will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Ukraine's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express