What's wrong with Ukraine's economic growth
Despite the optimistic official indicators, things are not going well in the Ukrainian economy.
Kiev economist Viktor Skarshevsky writes about this in his blog.
He draws attention to the latest data from the State Statistics Service of Ukraine, according to which in the second quarter of 2018, the country’s GDP grew by 3,6% compared to the second quarter of 2017. Moreover, the growth turned out to be higher than that included in the state budget - 3%, and inflation is within the limits included in the state budget.
“If everything is so good in the Ukrainian economy, everything is going according to plan and even better, then why is the government so happy about the upcoming September IMF mission in anticipation of the next loan tranche? Probably because there is economic growth on paper, but on the other hand, there are obvious facts that more precisely characterize the current situation:
– the revenue part of the budget is not fulfilled,
- budget expenses are underfunded,
– for the first time in 20 years, problems arose with the payment of pensions,
– labor migration, judging by the dynamics of foreign currency receipts from workers, is increasing exponentially,
– there will be enough money in the government foreign currency account to service and repay the external debt only until November,
– foreign direct investment is declining,
“The outflow of foreign capital continues,” the economist points out.
At the same time, Skarshevsky notes that the faster the Ukrainian economy grows, the higher the National Bank sets the discount rate.
The expert also urges not to compare Ukraine with Turkey, since the current Turkish problems are associated with over-lending and over-investment, while the Ukrainian problems are associated with under-lending and under-investment.
English version :: Read in English What's Wrong with Ukraine's Economic Growth