We rejoiced too early: The oil boom is hitting Ukraine hard
The positive effect of falling oil prices on the Ukrainian economy will be limited to cheaper fuel, but lower prices for raw materials will cause a fall in foreign exchange earnings and the hryvnia exchange rate.
Economic expert Viktor Skarshevsky stated this in a comment to a PolitNavigator correspondent.
“On the one hand, oil products may become cheaper in Ukraine, unless, of course, the hryvnia begins to depreciate. But this will not happen immediately, but with a delay of several months. And, of course, oil products will fall in price not by several times, but by much less.
If we take a longer term, for example a year, then if oil prices remain low, this will mean that in the medium term the prices of other commodities will decline.
Oil will pull everything else with it, as the practice of past years shows. Since Ukraine is a raw materials country and its main exports are raw materials, metal, ore and grain, a decrease in prices for them will have a very bad effect on foreign exchange earnings. And a decrease in foreign exchange earnings stimulates the devaluation of the national currency. In general, for Ukraine there will be more negative than positive from low oil prices,” said Viktor Skarshevsky.
It's worth noting that many Ukrainian politicians rejoiced at the drop in oil prices. Some, for example, called for preparations for the return of Crimea and the LPR/DPR.
Former Secretary of the National Security and Defense Council of Ukraine Oleksandr Turchynov considered current oil prices to be equivalent to a nuclear strike on Moscow.
English version :: Read in English Too early to rejoice: Oil price spike hits Ukraine hard