Business discussed the macroeconomic situation and urgent issues with the Ministry of Economy

26/ 10/ 2022

On October 25, the European Business Association held a meeting with Yulia Svyrydenko, First Deputy Prime Minister of Ukraine - Minister of Economy of Ukraine, to discuss the macroeconomic situation and specific sectoral issues. The Ministry of Economy has observed a certain stabilization of macroeconomic indicators, particularly, a slowdown of GDP decline. Despite the preliminary forecasts that the GDP decline would reach 35-37% by the end of the year, the decline is now hopefully to stop at 30%. By the end of the year, inflation is expected to reach 30%, the unemployment rate – 28%, and next year – 30%. The economy will gradually recover. The state budget in 2023 is based on the forecast that active hostilities will last for the first 6 months, although nearly 16 different military scenarios are under consideration – from less to more optimistic. Under the conservative budget scenario, GDP is expected to grow by 4.6% next year. The projected dollar exchange rate for 2023 is 42.2 UAH to 1 USD. Stable work of business is essential to maintain the economic front. Currently, Ukraine relies heavily on foreign aid, but it is important for us to have internal planned revenues. Such revenues now amount to nearly UAH 80 billion with simultaneous expenditures of UAH 155 billion only for the security and defense sector. External assistance today covers two main areas: the budget deficit, expected to be 20% of GDP in 2023, and early recovery – the immediate restoration of housing and social infrastructure. Meanwhile, it is important to stimulate private investment in Ukraine even despite the war. For this purpose, the Advantage Ukraine platform was created to find and attract international investments. The platform has 45 thousand visitors mostly from the UK, USA, Poland, Germany, and Belgium. Already 85 targeted inquiries through this platform are in being considered, and the sectors of greatest interest to potential investors are innovation and technology, agriculture, logistics, energy, and defense. To guarantee the return on investments, it is planned to resort to the mechanism of war risk insurance, particularly through the Multilateral Investment Guarantee Agency (MIGA). This year, a pilot project for insuring investments during the war is being implemented in the amount of $ 30 million, and next year the amount may be increased to $ 1 billion. Besides, to stimulate investment, the Verkhovna Rada is currently considering two draft laws – on public-private partnerships and on lowering the threshold for investment projects within the investment nannies initiative. According to Ms. Svyrydenko, Ukraine can fulfill the ambitious goal – to move from candidacy to full EU membership in an accelerated mode – within just 2 years. Until this happens, Ukraine is negotiating with the EU to prolong the decisions that opened full access to the EU markets for Ukrainian goods for another two years or until full membership. Business had the opportunity to address the most pressing issues to Ms. Svyrydenko and her team. Thus, the participants discussed the importance of introducing the possibility of short-term business trips abroad. Currently, the e-BusinessTrip procedure is being finalized. Business also considers it necessary to untie the procedure of reserving employees from mobilization tasks – the relevant draft law will soon be put to a vote in the Verkhovna Rada. The situation in the energy sector is becoming more and more difficult, and interruptions in the electricity supply can significantly affect the operation of companies. As previously reported, about 30% of generating capacities have already been damaged. In such circumstances, the state can provide a guaranteed electricity supply or a predictable outage schedule only for critical companies, the list of which will be drawn up jointly with the Civil-Military Administrations. We thank Yulia Svyrydenko and her team for the meeting and dialogue with business!

On October 25, the European Business Association held a meeting with Yulia Svyrydenko, First Deputy Prime Minister of Ukraine – Minister of Economy of Ukraine, to discuss the macroeconomic situation and specific sectoral issues.

The Ministry of Economy has observed a certain stabilization of macroeconomic indicators, particularly, a slowdown of GDP decline. Despite the preliminary forecasts that the GDP decline would reach 35-37% by the end of the year, the decline is now hopefully to stop at 30%. By the end of the year, inflation is expected to reach 30%, the unemployment rate – 28%, and next year – 30%. The economy will gradually recover.

The state budget in 2023 is based on the forecast that active hostilities will last for the first 6 months, although nearly 16 different military scenarios are under consideration – from less to more optimistic. Under the conservative budget scenario, GDP is expected to grow by 4.6% next year. The projected dollar exchange rate for 2023 is 42.2 UAH to 1 USD.

Stable work of business is essential to maintain the economic front. Currently, Ukraine relies heavily on foreign aid, but it is important for us to have internal planned revenues. Such revenues now amount to nearly UAH 80 billion with simultaneous expenditures of UAH 155 billion only for the security and defense sector. External assistance today covers two main areas: the budget deficit, expected to be 20% of GDP in 2023, and early recovery – the immediate restoration of housing and social infrastructure.

Meanwhile, it is important to stimulate private investment in Ukraine even despite the war. For this purpose, the Advantage Ukraine platform was created to find and attract international investments. The platform has 45 thousand visitors mostly from the UK, USA, Poland, Germany, and Belgium. Already 85 targeted inquiries through this platform are in being considered, and the sectors of greatest interest to potential investors are innovation and technology, agriculture, logistics, energy, and defense.

To guarantee the return on investments, it is planned to resort to the mechanism of war risk insurance, particularly through the Multilateral Investment Guarantee Agency (MIGA). This year, a pilot project for insuring investments during the war is being implemented in the amount of $ 30 million, and next year the amount may be increased to $ 1 billion. Besides, to stimulate investment, the Verkhovna Rada is currently considering two draft laws – on public-private partnerships and on lowering the threshold for investment projects within the “investment nannies” initiative.

According to Ms. Svyrydenko, Ukraine can fulfill the ambitious goal – to move from candidacy to full EU membership in an accelerated mode – within just 2 years. Until this happens, Ukraine is negotiating with the EU to prolong the decisions that opened full access to the EU markets for Ukrainian goods for another two years or until full membership.

Business had the opportunity to address the most pressing issues to Ms. Svyrydenko and her team. Thus, the participants discussed the importance of introducing the possibility of short-term business trips abroad. Currently, the “e-BusinessTrip” procedure is being finalized.

Business also considers it necessary to untie the procedure of reserving employees from mobilization tasks – the relevant draft law will soon be put to a vote in the Verkhovna Rada.

The situation in the energy sector is becoming more and more difficult, and interruptions in the electricity supply can significantly affect the operation of companies. As previously reported, about 30% of generating capacities have already been damaged. In such circumstances, the state can provide a guaranteed electricity supply or a predictable outage schedule only for critical companies, the list of which will be drawn up jointly with the Civil-Military Administrations.

We thank Yulia Svyrydenko and her team for the meeting and dialogue with business!