CIS investors have given up on Ukraine
Ukraine has lost its position as the leading recipient of direct investment from the CIS countries, according to data from the Eurasian Development Bank (EDB), cited by Izvestia.
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Thus, over the past four years, accumulated investments in this country from the CIS countries and Georgia have fallen from $17 billion to $5,6 billion. Investments in ferrous and non-ferrous metallurgy are being reduced, and banks are leaving. The reduction of assets of retail companies continued. Corporations in the oil and petrochemical industries also continued to divest assets. The EDB fears that if this trend continues, the country will be completely excluded from regional production chains.
In general, the volume of direct investment flowing into Ukraine has also fallen markedly. If in 2013 the country received $4,5 billion, then in 2016 - $3,3 billion, in the first half of 2017 - only $711 million, the State Statistics Service of Ukraine reported. For comparison: Russia received $17,4 billion in January–June,” the publication notes.
The report of the EDB Center for Integration Studies “Monitoring of mutual investments in the CIS countries - 2017” indicates that in such conditions “in the coming years, we can predict a further decline in the role of Ukraine in investment flows in the CIS and the country’s exclusion from regional production chains.”
“Metallurgists are reducing investments in Ukraine. Banks are leaving. The reduction of assets of retail companies continued. Companies in the oil and petrochemical industries also continued to withdraw assets,” said Evgeniy Vinokurov, director of the EDB Center for Integration Studies.
Ukrainian investments in countries also continue to decline. For example, the Milkiland company lost its Russian asset, the Rylsky Syrodel cheese factory, for debts, and the metal rolling plant in Armavir, owned by the Industrial Union of Donbass, was also declared bankrupt.
With a low volume of foreign direct investment, the country will be able to exist, but will not be able to count on serious economic achievements, analysts say.
“The problem is that then we can’t count on any kind of rapid economic growth. The fall in foreign direct investment means that capital does not believe in this country, does not believe in the protection of private property in it, in the profitability of investments, and is losing faith in the national currency. I think that the situation is largely related to the increasing number of cases of raider takeovers of enterprises in various areas of business - from agricultural companies to trade. The number of such cases per year is up to 5 thousand, according to estimates by the Anti-Raider Union of Entrepreneurs of Ukraine,” said Alor Broker analyst Kirill Yakovenko.
“The complete loss of direct investment means isolation; the absence of an influx of foreign capital into the country can quickly drop the value of the national currency. This is all the more dangerous because Ukraine has a multibillion-dollar debt to the IMF, which cannot be repaid without strong economic growth. In 2019, Ukraine will need to repay about $18 billion in external loans,” the publication recalls.
CIS Investors Have Given Up on Ukraine