World Bank improves forecast for Ukraine’s economic growth in 2018

The World Bank has improved its forecast for the growth of Ukraine’s GDP in 2018 to 3.5% from 3%, while the forecast for 2019 has been revised upwards to 4% from 3%, according to previous the projections given in January 2017.

“In Ukraine, government stabilization efforts, supported by international financial institutions and a bumper agricultural crop, led to a sharp rebound in growth to 2.3 percent, following a cumulative 15.8 percent contraction in 2014-15 in the wake of geopolitical tensions with Russia,” the World Bank said in its report titled: “Global Economic Prospects June 2017: A Fragile Recovery,” published on June 3.

The Bank says that it also revised upwards the assessment of Ukrainian economic growth in 2016 to 2.3% from 1%, having maintained the forecast for the current year at 2%.

“In general, currencies in commodity exporters have strengthened and inflation has retreated as commodity prices have stabilized, allowing monetary policy to be eased in some countries (e.g., Brazil, Chile, Colombia, Ghana, Kazakhstan, Russia, Ukraine). Fiscal policy adjustment to low commodity prices is easing in countries where such adjustment started early and is well advanced (e.g., Honduras, Indonesia, Malaysia). Confidence is generally improving, although it remains fragile (e.g., Argentina, Brazil, Kazakhstan, Nigeria, Russia, Ukraine),” the report said.

“While private consumption growth appears to have bottomed out, impaired household balance sheets continue to weigh on consumption in some countries (e.g., Brazil, Kazakhstan, Russia, Ukraine),” it added.

The Bank also mentioned a cargo blockade on eastern region in Ukraine in March among geopolitical risks within the region.

As was reported with reference to the State Statistics Service of Ukraine, the growth of Ukraine’s GDP in the first quarter of 2017 slowed to 2.4% year-over-year, against 4.8% in the fourth quarter of 2016, which coincides with the World Bank’s projections.

Ukraine’s government drew up the 2017 national budget proceeding from a 3% increase in GDP amid 8.1% inflation, while the National Bank of Ukraine (NBU) expected a 2.8% rise in GDP amid 9.1% inflation.

The NBU later lowered its GDP growth forecast to 1.9% due to the Donbas blockade, while the government updated its economic growth forecast setting at 1.8% and revising its inflation forecast upwards to 11.2%.

Inflation in Ukraine in January-April 2017 was 4.9%. Inflation in April 2017 from April 2016 slowed to 12.2% against 15.1% in March 2017 from March 2016.

Ukraine’s government projects GDP growth will accelerate to 3% in 2018 and further to 3.6% in 2019 while inflation will slow to 7% and 5.9%, respectively.

Source: infagro.com.ua

Ukraine, Poland to jointly build helicopters

WARSAW, Poland — Ukrainian Deputy Prime Minister Stepan Kubiv has announced that Ukraine and Poland plan to jointly develop new helicopters for the countries’ armed forces.

The two governments plan to participate on the “modernization, but also construction of new helicopters from the design phase to their production,” Kubiv, who also serves as Ukraine’s minister of economic development and trade, told local business daily Dziennik Gazeta Prawna in an interview.

According to Kubiv, the Ukrainian defense industry is not capable of developing new helos on its own, and it needs to cooperate with industry players from Poland and potentially companies from other Western nations.

“We can develop this branch only in cooperation, also with Poland. I cannot rule out that European and Northern American companies will join this [project],” Kubiv said. “Taking part in modernizing aircraft and helicopters on the global markets is one of Ukraine’s ambitions.”

The latest announcement follows earlier statements by a senior Polish politician. In late 2016, Polish Defense Minister Antoni Macierewicz said Warsaw and Kiev are discussing plans to launch a joint production effort of helos that could be used by the militaries of Central and Eastern European allies.

According to the Polish minister, Ukraine’s state-owned manufacturer Motor Sich makes “excellent engines.”

A number of countries in the region are planning to purchase new helicopters to replace their Soviet-designed helos. Most recently, Lithuanian Deputy Defense Minister Giedrimas Jeglinskas announced that the country may purchase new transport helicopters to completely replace its fleet after 2020.

By: Jaroslaw Adamowski

Source: defensenews.com

Ukraine, South Korea to develop aerospace cooperation

Ukraine and South Korea are working on boosting cooperation in the aerospace area.

The press service of the State Space Agency of Ukraine (SSAU) reported that further development of promising cooperation in the sphere was discussed at the fifth meeting of the Ukrainian-South Korean committee for scientific and technical cooperation of the relevant joint working group.

“The sides discussed the state and prospects for development of Ukrainian-South Korean cooperation in the current cooperation spheres and studied the opportunities of developing cooperation in new areas, the satellite segment and the application of global space systems in the public economy sphere,” the press service said.

Representatives of South Korean Ministry of Science, ITC and Future Planning, Korea Aerospace Research Institute (KARI), the South Korean Embassy in Ukraine and representatives of SSAU, Yuzhnoye (Pivdenne) Design Bureau, Research and Production Enterprise Hartron-Arkos Ltd. and the National Center of Space Facilities Control And Test took part in the meeting.

South Korea is a promising partner of Ukraine in cooperation in the aerospace sphere in Southeast Asia. The sides have successful cooperation in the launch services: in 2013-2015 Dnepr carrier rocket placed South Korean satellites KompSat-5, STSat-3 and KompSat-3A to orbit.

Yuzhmash (Pivdenmash) is holding talks with KARI on expanding cooperation in the creation of aerospace equipment. Recently Yuzhmash finished a contract signed with KARI in 2016 to supply equipment to the customer.

Sources: en.interfax.com.ua and korea.net

KPMG:Your Business in Ukraine 2017

KPMG practical guide provides insight into basics. It is a compass to all stages of your business in Ukraine: market entry strategies, your company registration, taxation and other relevant information.

Our industry expertise will help you to find effective practical solutions in Ukraine and abroad.

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Commercial Space Launch Complex Site Selection Completed

March 14th, 2017 Halifax, NS – Dnipro, Ukraine

Maritime Launch Services (MLS) Ltd., established in Halifax, is pleased to announce it has committed to a launch site location following a study of prospective sites across North America. An exhaustive review was conducted which assessed 14 potential locations over the last year. The preferred site is located in the Guysborough Municipality near Canso and Hazel Hill in Nova Scotia, Canada and would host a commercial launch complex for the Cyclone 4M orbital launch vehicle from Ukraine. The criteria evaluated through the study included access to polar/sun synchronous orbit, very low population density, proximity to multimodal transportation, and interest from the community, province and government.

Vernon Pitts, Warden of the Municipality of Guysborough said, “We are pleased that Maritime Launch Services has chosen to invest in our community and we look forward to continued dialogue. Since we were first introduced to this development a few months ago we have been impressed with the proponents’ approach, and we will continue to work collaboratively with MLS as the project evolves.”

Recent site visits and meetings in Nova Scotia and Ottawa, Ontario by a delegation from MLS and Yuzhnoye were decisive in the final site selection in large part due to the enthusiastic support from the community, academia and multiple levels of provincial and federal government. John Isella, CEO of MLS, said “While we have a number of challenges ahead to work through the regulatory processes, approvals and site planning, we are optimistic that we can break ground on the launch complex within a year and meet market demands with our first launch in 2020.” MLS plans to achieve a launch rate of eight per year by 2022.

With the growing global demand for space launch services, MLS will bring the mature space launch technology of Yuzhnoye and Yuzhmash in Ukraine to Nova Scotia. “Building on the historically close ties between Canada and Ukraine, and addressing the satellite constellation launch market with an all Ukrainian medium class (3350kg to SSO) launch service targeted at $45 million USD, are a few of the fundamental strengths of this program,” Isella said. “The timing is perfect for this venture. Ukraine’s independent space industry, and the solid market for these launch services all add to our confidence in this program. The Cyclone 4M rocket will become the standard of the medium class space launch industry.” Yuzhnoye and Yuzhmash in Ukraine, the providers of the launch vehicle, have been in operation for 62 years, launched 875 rockets, and built and launched over 400 spacecraft.

Initial funding was obtained in 2016 from United PARADYNE Corporation (UPC) in Santa Maria, Mr. Joe Hasay, President/CEO of UPC, said “This program is just what UPC has been seeking in order to expand into commercial space launch operations.” UPC is a founding partner in MLS, and will bring extensive experience to launch site operations and satellite customer support.

Points of contact:
Sales and Marketing – John Isella john.isella@maritimelaunch.com +1 321-537-2720
Spaceport Development – Steve Matier steve.matier@maritimelaunch.com +1 505-553-0822

Maritime Launch Services Ltd, Suite 900, 1959 Upper Water Street, Halifax, Nova Scotia, B3J3N2

http://maritimelaunch.com 

Council of the European Union confirms agreement on visa liberalisation for Ukrainians

On 2 March 2017, EU ambassadors confirmed, on behalf of the Council, the informal agreement reached on 28 February 2017 between the Maltese Presidency and the European Parliament on visa liberalisation for Ukrainians.

The agreement provides for visa-free travel for Ukrainian citizens when travelling to the EU for a period of stay of 90 days in any 180-day period.

We have demonstrated our strong commitment to visa-free travel for Ukranian citizens, now that Ukraine has met the necessary conditions for a visa free regime. The reform of the suspension mechanism adopted on 27 February enabled us to finalise this agreement.

Carmelo Abela, Maltese Minister for Home Affairs and National Security 

Next steps

Now that the agreement has been confirmed by EU ambassadors, on behalf of the Council, the regulation will be submitted to the European Parliament for a vote at first reading, and subsequently to the Council for adoption.

Background

In December 2015 the Commission found that Ukraine had met all the benchmarks of the visa liberalisation plan and was therefore ready for the exemption of the visa requirement. On 20 April 2016 the Commission published the proposal for visa liberalisation for holders of Ukrainian passports.

Once the new visa regime for Ukraine is formally adopted, it will  move the country from Annex I of Regulation 539/2001 (countries whose nationals need a visa to enter the Schengen area) to Annex II of the same regulation (visa free countries).

In the context of the current migratory and security situation in the European Union, and taking into account its proposals on visa liberalisation for Georgia, Ukraine, Turkey and Kosovo, the Commission decided in May 2016 to present a proposal for a regulation revising the current suspension mechanism. The revised suspension mechanism allows, in specific circumstances, for the suspension of the visa waiver for the nationals of a specific country.

In its negotiating position on visa liberalisation for Ukrainian citizens, agreed on 17 November 2016, Coreper took the view that the instrument should not enter into force before the entry into force of the revised suspension mechanism. The Council adopted the regulation on the suspension mechanism on 27 February 2017.

Ireland and the United Kingdom will not be subject to the application of these measures, in accordance with the protocols annexed to the EU treaties. The visa regime of these member states remains subject to their national legislation.

consilium.europa.eu

Ukrainian IT industry employs 100,000 people

The Ukrainian IT industry now employs 99,940 people — up from 89,300 last year — according to the latest report of DOU.UA, an authoritative industry resource. The figure includes programmers, QA specialists, project managers and other IT-related professionals.

Almost half of these professionals live in Kyiv (Kiev). Others are inhabitants of such other major Ukrainian cities as Kharkiv (Kharkov), Lviv (Lvov), Dnipro (previoulsy known as Dnipropetrovsk), and Odessa.

With its Ukrainian offices in Kyiv, Dnipro, Lviv, Kharkiv and Vinnytsia, US-headquartered EPAM is the biggest employer in the industry. Among other industry leaders are such companies as SoftServe, Luxoft, GlobalLogic and Ciklum, if judging by the number of employees, says the report.

With monthly salaries reaching or exceeding $3,000 for certain specialties, remunerations in the Ukrainian IT sector are high or very high by local standards.

Women are becoming more interested in the field. This year the share of female specialists now reaches 15%, up two percentage points from last year.

Ukrainians have shown growing hunger for IT education, according to the study. In 2015, almost 30,000 Ukrainians attended IT courses.

Among the organizations supporting the educational effort is the BrainBasket Foundation, a Ukrainian NGO. Earlier this year George Soros offered his personal support to BrainBasket’s Technology Nation program through the International Renaissance Foundation.

Ukraine’s IT work force could double to some 200,000 by 2020, according to a recent report on the Ukrainian IT outsourcing and software devemopment by Ukraine Digital News and AVentures Capital.

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2017 Should Be the Year Ukraine’s Economy Takes Off

Three years after the Revolution of Dignity, the Ukrainian economy has stabilized and is ready for growth. Will the growth be fast or slow? Dangers lie ahead, but opportunities prevail.

Success is easily taken for granted, so it is worth recalling what Ukraine has accomplished in the past three years. An unsustainable budget deficit of 10 percent of GDP has now been brought down to about 3 percent of GDP, mainly through cuts in public expenditures. The public debt has leveled out at 80 percent of GDP, while the IMF had feared it would spiral out of control. The government has sensibly reduced the exorbitant payroll tax from 45 percent to 22 percent.

Foreign payments have reached balance thanks to a necessary devaluation of the hryvnia, and the exchange rate has stabilized on the market. Ukraine’s international gold and currency reserves have surged from $5 billion in February 2015 to $15 billion, sufficient for a gradual liberalization of the strict currency controls. Ukraine accomplished this while Russia deprived it of one quarter of its prior exports through draconian trade sanctions.

With the nationalization of PrivatBank on December 18, the National Bank of Ukraine (NBU) has nearly completed an impressive cleansing of the corrupt and undercapitalized banking system. Owing to its strict monetary policy, the NBU has reduced inflation from a high of 61 percent in April 2015 to 12 percent today.

Ukraine has carried out major structural reforms. The unification of energy prices deprived corrupt gas traders of up to eight percent of GDP. The e-declarations of wealth will deal a major future blow to corruption. The ProZorro public procurement system does so as well, and so do deregulation and improved corporate governance.

Yet none of this offers the Ukrainian people much solace. The economy started growing by 2 percent in the third quarter of 2016, but only after a frightful slump of 17 percent in 2014-15. The quality of public services must also improve. These are the great hopes for 2017.

In the new year, reform of the state administration should finally start in cooperation with the European Union. The byzantine top government structures need to be simplified, modernized, and opened up.

Acting Minister of Health Ulana Suprun has launched the first real reform of the Ukrainian health care system. Minister of Education Lilia Hrynevych is sensibly trying to restore the twelve-year school system that was vandalized under Viktor Yanukovych. The most important reform of the state is the judicial reform that was legislated last June. A new Supreme Court is supposed to be composed in March.

Hopefully, a reformed government will interact better with the private sector. More deregulation is gradually taking place, but do not expect significant improvement of the fiscal or customs services. That is likely to take another year.

Current forecasts suggest 2-3 percent growth in 2017, but it should be the year that Ukraine takes off with a much higher growth driven by exports to Europe, the Middle East, and China. Lower inflation and interest rates should spur credit expansion and drive higher domestic investment. Energy production should rise with lower taxation.

Yet our forecasts must not be too rosy. The greatest threat to Ukraine’s immediate future is US President-elect Donald Trump, who seems to be dying for an early deal with Russian President Vladimir Putin. The victim is all too likely to be Ukraine.

Another Russian threat is the arbitration case between Naftogaz and Gazprom in Stockholm. Naftogaz claims $28 billion and Gazprom $39 billion, which renders this the biggest international arbitration case in history. A verdict is expected in the second quarter, though any settlement would presumably take years.

Traditionally, Ukraine received about 4 percent of GDP in foreign direct investment each year, but this has effectively been zero since 2014 because of Russia’s military aggression, and minimal recovery is expected in 2017.

By contrast, Ukrainian domestic concerns seem relatively limited. Prime Minister Volodymyr Groisman aspires to the legalization of private sales of agricultural land by 2020, which might be realistic. After having failed to privatize the Odesa fertilizer plant twice, privatization has stalled. Corruption scandals are ample and they are welcome because they expose and impede corruption.

In view of Ukraine’s substantial reform attainments and embattled position, one would hope that the international community would mobilize $5 billion a year in international investment credits to compensate for some of the great damage Russian aggression has caused to the Ukrainian economy.

Anders Åslund is a senior fellow at the Atlantic Council in Washington. He tweets @anders_aslund.

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