This is a curated list of the most important economic news for the past week.
This past week has yet again been a quite affaire with few but monumental news. We interviewed the head of the German-Ukrainian Chamber of Industry and Commerce, Alexander Markus, about his thoughts on business prospects in Ukraine.
“Ukraine has many advantages, EU border country, attractive production framework and cost, well educated people, European mentality, even some investment incentives, there are a lot of things that make Ukraine more and more attractive…,” Markus said.
However, according to him, challenges remain, but when or if they are overcome, the potential in Ukraine is quite large. Not just for export focused production and manufacturing, but also as a market where products can be sold.
We also interviewed UkraineInvest who confirmed that the interest in Ukraine is growing among foreign companies. Problems with the global supply line interruptions further deepened by the pandemic has sent a lot of companies looking to set up shop in Ukraine.
“We’re working on a nearshoring strategy at UkraineInvest because we can see that tendency is growing. It was happening before 2020, but 2020 was a triggering point because, during the pandemic, I think about 20 percent of European companies experienced that their contracts were not fully implemented or at appropriate quality or were not delivered on time from Asia. So that triggered the tendency in the European Union on the concept of Second Asia. And we do see attention from European companies. According to UkraineInvest estimates, due to relocation, Ukraine can attract investments from 550 to 1 billion USD per year.”
We want chips
Chips, the electronic ones, are in short supply. As mentioned above, supply chains are increasingly failing and distribution and logistics companies are under pressure as they have no empty containers to ship wares in. In Foreign Affairs, Chad P. Bown, Reginald Jones Senior Fellow at the Peterson Institute for International Economics, argues that this problem started under the Trump administration:
“One of the biggest culprits was a sudden shift in U.S. trade policy. In 2018, motivated by national security concerns, the Trump administration launched a trade and tech war with China that jolted the entire globalized semiconductor supply chain. The fiasco contributed to the current shortages, hurting American businesses and workers,” writes Bown.
Naturally the problem of shortage of electronic chips should not surprise many people who are either working with the sector or avid readers of Ukraine Nu. A month ago we interviewed the CEO of Ektos, who had to find their own solution to this very problem. That interview can be found here.
A political giant has left Ukrainian politics for now. Arsen Avakov, the interior minister, left his post with a resignation. Avakov has been the interior minister for years and served under four prime ministers and two presidents. He has been accused of corruption, called the most powerful man in Ukrainian politics and while others applauded him.
In the political scene, Avakov has seemed immortal. An unstoppable force to some, an immovable object to others. But for now, he has drawn back from the political scene, though some speculate that he will make a return for the presidential elections in three years.
Ukraine might be closer to IMF
Ukraine and the IMF have had some seemingly successful talks over the past months. At least it sounds like they are getting closer to an agreement, that would make IMF willing to pay out another tranche of the – in total – 5 billion USD loan promised them by IMF last year.
Since the first tranche was paid out last summer, the relationship between Ukraine and IMF has been strained to say the least. The independence of the National Bank of Ukraine has been a major concern for IMF, but according to the government, an agreement is in sight now.
1 million vaccines passed
One out of forty Ukrainians have now been full vaccinated against the novel coronavirus with another million waiting to get their second dose. Still, the herd immunity dream is far away for Ukraine, but the number of vaccinated Ukrainians is slowly rising in spite of vaccine scepticism and supply problems.
Over 500 land market agreements concluded
The land reform is slowly starting to open the land market. But it is going slow. This week, the first 500 land market agreements were concluded, and the total amount of land sales are still not in a large volume. However, the land market is to some extend functional now, waiting to be expanded over the coming years for companies shortly and maybe even foreigners in the future.
EU and Ukraine in agreement
Tuesday, the EU and Ukraine signed a memorandum of understanding about raw materials such as lithium and batteries. According to Reuters, the EU hopes to boost its supply of these rare minerals from Ukraine, which is essential in electronics in renewable energy, defense, automotive, and aerospace.