Ukraine 

Ukraine country policy

Policy established 23 May 2011

• ILC, bank guarantee or central public guarantee (conditional)
• The country ceiling is 1000 mln euro
• Early warning signal 400 mln euro
• - of which was used as at 2011-12-31 227 mln euro

Country class: 7

Ukraine country facts

Atradius Dutch State Business Economic Research
Country Report last updated :  2 May 2011
Country :  UKRAINE  

Political Situation
Less Unstable

Head of state
President Viktor Yanukovich.

Form of government
Coalition of the Party of the Regions, the Communists and Lytvyn Bloc, headed by p.m. Mykola Azarov. 
 
Internal Economic Situation
Recovering From The 2009-Recession

General situation
After the deep recession of 2009 (real GDP dropped by 15.1% because of a collapse of industrial output by 24.5%), moderate economic recovery in 2010 and 2011 (>4% p.a.) based on some rebound of exportdemand and prices and on domestic demand. Drought negatively effected agricultural output in 2010H2. After months of declining inflation, rising prices since 2010H2 due to higher gas and food prices. Bad corruption index (134th of 178); weak property rights and poor corporate governance with excessive state leverage. Large unofficial economy. The recession badly hit the banking sector in 2009 (deposit outflow, weakened asset quality), contributing to defaults and restructurings: 24 banks (12% of sector’s assets) entered temporary administration, 5 of them recapitalised, 3 nationalised (Rodovid-, Kiev-, Ukrgazbank). IMF estimates NPL-ratio of >40%. Foreign owned banks are more stable but wary of taking more exposure.
 

External Economic Situation
Despite Improvement, Still Weak

Important export-products
Steel/metals (33%), machinery and equipment (17%), agricultural products (24%).
Important markets :  EU (30%), Russia (22%), Asia (10%), other CIS (10%).
Important import-products
Fuel and energy (34%), machinery and equipment (20%).

 
Balance of payments 
In 2010 exports recovered strongly from the collapse in 2009 thanks to higher demand and global prices of steel: -45%, +32%. But because imports increased even more, the current account deficit nearly doubled. The capital account recovered after two very negative years: less capital flight, some FDI. The gasdeal with Russia has prevented acute liquidity problems of state-owned Naftogaz. Since 2010 more stable hryvnia after a strong depreciation in 2009 (48% vs US$).