8. kse alumni 24_04_15

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© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 1 WHAT HINDERS INVESTMENT IN UKRAINE? Tetiana Sytnyk, GfK Ukraine April 24, 2015

Transcript of 8. kse alumni 24_04_15

© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 1

WHAT HINDERS INVESTMENT IN UKRAINE?Tetiana Sytnyk, GfK Ukraine

April 24, 2015

© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 2

Source: State Statistics of Ukraine, Statistics Office of Poland

The Ukrainian economy was weak to withstand the crisis. Years 2009-2013 are lost years for the Ukrainian economy

2005 2006 2007 2008 2009 2010 2011 2012 201380

90

100

110

120

130

140

150

111

136

Read GDP index, 2005=100

Ukraine Poland

2005 2006 2007 2008 2009 2010 2011 2012 201360

80

100

120

140

160

79

155

Investment index, 2005=100

Ukraine Poland

2005 2006 2007 2008 2009 2010 2011 2012 201360

80

100

120

140

160

180

72

164

Export index, 2005=100

Ukraine Poland

2005 2006 2007 2008 2009 2010 2011 2012 201370

90

110

130

150

170

117

152

Import index, 2005=100

Ukraine Poland

© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 3

Poor economic policies have led to structural imbalances in the Ukrainian economy

GDPStagnation 0.0%

Household consumption

Growth +7.8%in comparison to 2012

Investment

Reduction -6.6%in comparison to 2012

Government balance

General government deficit

-4.8% of GDP

Combined deficit(General government and Naftogaz)

-6.7% of GDP

Current account balance

-9.2% of GDPExport: reduction -9%

Import: reduction -6%

In comparison to 2012

Source: Ukrainian State Statistics Committee, IMF

© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 4

Poor economic policies have led to structural imbalances in the Ukrainian economy

GDPDecline –6.8%

Household consumption

Decline -9.6%in comparison to 2013

Investment

Decline -23%in comparison to 2013

Government balance

General government deficit

-4.6% of GDP

Combined deficit(General government and Naftogaz)

-10.3% of GDP

Current account balance

-6.1% of GDPExport: reduction -14.5%

Import: reduction -22.1%

In comparison to 2013

Source: Ukrainian State Statistics Committee, IMF

© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 5

Dynamics of household consumption and investment in Ukraine and Poland, 2005-2014

2005 2006 2007 2008 2009 2010 2011 2012 2013 201450

70

90

110

130

150

170

190186

168

79

61

Ukraine, index 2005=100

Household consumption Investment

2005 2006 2007 2008 2009 2010 2011 2012 201350

70

90

110

130

150

170

190

128

155

Poland, index 2005=100

Household consumption Investment

© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 6

Dynamics of investment and household consumption in Ukraine

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2016 17

13

-16

7

16

8 8

-10

4

2124

-1

-50

37

3

-7

-23Household consumption

Investment

% real change comparing to the previous year

© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 7

2009–2012: saving and investment reduced, borrowing increased

2009 2010 2011 2012 2013

60

81

116

97

63

Net capital formation, billion UAH

2009 2010 2011 2012 2013

45

82 83

12

-48

-1

-61-87 -98

Net saving, billion UAH Net borrowing/lending, billion UAH

© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 8

In 2014, spike of saving in the economy happened in the third quarter

Q1'2014 Q2'2014 Q3'2014 Q4'2014

6 4 6

15

Net capital formation, billion UAH

Q1'2014 Q2'2014 Q3'2014 Q4'2014

-27 -24

35

-16-6 -4 -5

-12

Net saving, billion UAH

Net borrowing/lending, billion UAH

© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 9

Source: State Statistics Service of Ukraine, Statistics Office of Poland

Share of households and companies (non-financial corporations) in total saving in the economy

2009 2010 2011 20120

10

20

30

40

50

60

70

80

90

100

3330

7

18

73

8184 84

Poland: share of households and companies in total saving

Households Companies

2009 2010 2011 2012 20130

10

20

30

40

50

60

70

80

90

100

54

83

61

88

96

37

20 1714 12

Ukraine: share of households and com-panies in total saving

Households Companies

© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 10

Sector of non-financial corporations

Allocation of income of companies in Ukraine and Poland, 2012 (integrated national accounts by sector of non-financial corporations)

100% 49% 35% 32%

100% 32% 10% 4%

All value added created by companies

Gross profit (left after payments to

employees and taxes on production and

imports)

Gross balance of primary income

(left after payment of property income)

Gross disposable income = gross saving

(after taxes on income and wealth)

POLAND

UKRAINE

© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 11

Sector of non-financial corporations

100% 32% 7% 3%

UKRAINE - 2012

100% 32% 10% 4%

UKRAINE - 2013

All value added created by companies

Gross profit (left after payments to

employees and taxes on production and

imports)

Gross balance of primary income

(left after payment of property income)

Gross disposable income = gross saving

(after taxes on income and wealth)

Allocation of income of companies in Ukraine, 2012-2013 (integrated national accounts by sector of non-financial corporations)

© GfK 2015 | What hinders investment in Ukraine?| 24 April 2015 12

What are implications?

• Lack of investment is the cost of populism which led to the re-distribution of resources (savings) from companies to households.

• The current challenge is to return trust of investors, and…

• …to ensure smooth financial intermediation which transfers savings of households to investment projects

• s