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Ukraine: Macroeconomic Briefs

January 29, 2010 | “The Kyiv Post"

Unemployment rate stabilizes

After rising sharply at the end of 2008 along with the beginning of an economic crisis, Ukraine’s unemployment rate stabilized at around 9 percent in the second half of last year in seasonally adjusted terms, according to the latest data from the International Labor Organization. Ukraine compares favorably on this measure with regional peers such as Hungary, Slovakia and Turkey, whose unemployment rate is close to or tops 10 percent, despite those countries enduring a less severe economic downturn. Moreover, results of a recent survey of domestic enterprises shows that a vast majority of top managers did not expect the number of their employees to change in the fourth quarter of 2009 and saw the number of personnel on forced leave declining. These findings suggest the period of severe cost cuts and layoffs in the private sector is close to an end. Before the crisis, Ukraine’s unemployment rate wasin the 6-7 percent range for several years.

EBRD to invest $1.5 billion in Ukraine

The European Bank for Reconstruction and Development (EBRD) plans to invest at least $1.5 billion in Ukraine this year, the Bank’s country director, Andre Kuusvek, said. The EBRD invested about $1.5 billion in Ukraine in 2009, mostly in the financial sector to help local banks cope with financial turmoil. Its priorities are going to change this year, shifting to infrastructure and energy projects. Importantly, EBRD project loans are not dependent on IMF financing and will enable eligible Ukrainian companies to receive foreign currency support even if other sources of external financing remain hardly available due to the International Monetary Fund’s lending program for Ukraine remaining on hold.

Lenders, analysts predict 2.5-4.7 percent growth

The EBRD forecasts Ukraine’s gross domestic product to rise by 3 percent in 2010 and deliver the same growth in 2011. A similar forecast released by the International Monetary Fund predicts growth of 2.7 percent this year and 4.4 percent next. The World Bank expects the Ukrainian economy to recover by 2.5 percent in 2010 and by 3.5 percent in 2011. Separately, consensus forecasts of Ukraine’s GDP growth, which are based on estimates provided by 15 western and domestic banks, currently stand at 2.7 percent for 2010 and 4.7 percent for 2011. The most optimistic of those is Goldman Sachs, which expects 5.5 percent GDP growth this year and 3 percent next. Last year Ukrainian GDP shrank by an estimated 14 percent, falling to the level of 2006.

By Dragon Capital

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