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Ukraine’s economic outlook has, since before the Euromaidan revolution of 2014, been in dire straits. But there is some positive news. The National Bank of Ukraine reports that gross foreign debt shrunk by 6%. Unian.info reports:
As of the end of 2015, the public sector’s debt was estimated at $35.959 billion, or 30.28% of gross domestic debt, while the NBU’s foreign liabilities amounted to $6.708 billion, or 5.6%, deposit cooperation stood at $12.823 billion, or 10.8% of the debt. The rest of borrowers accounted for 46.1%, or $54.677 billion in foreign debt, while the share of foreign investment (intercompany debt) was 7.2%, or $8.562 billion.
Unian also notes that the same metric shrunk by 11.1% in 2015, suggesting that the process of shedding foreign debt may be becoming more difficult.
Ukraine's gross foreign debt shrinks to $118.7 bln in 2015
The U.S. dollar remains the core foreign currency of Ukraine's foreign borrowings and accounts for 75.2% of the borrowed funds, the NBU said. As of the end of 2015, the public sector's debt was estimated at $35.959 billion, or 30.28% of gross domestic debt, while the NBU's foreign liabilities amounted to $6.708 billion, or 5.6%, deposit cooperation stood at $12.823 billion, or 10.8% of the debt.
Ukraine’s broader economic indicators are still pretty encouraging, but there is sign of life. The ratings agency Fitch has estimated that Ukraine’s economy will grow at around 1% in 2016:
“In 2015, the fall in GDP was 11.6%, in 2016 is expected to rebound to 1%. Inflation in 2015 was 48%, and in 2016 we assume 17%. The hryvnia exchange rate is assumed at 25 UAH per dollar in 2016,” — stated in the message.
We will remind, the government of Ukraine forecasts the growth of the economy at 1% with inflation of 12% and the rate of hryvnia at the level of 24,1 USD for the dollar.
Ukraine has had to balance a difficult reform process, a ramp-up in military spending, trade war and an armed conflict with its largest trading partner, and the loss of a significant amount of its territory, not to mention the turnover in government, a stubborn corruption problem, and other factors which have held Ukraine behind its other Eastern European peers. But investors may now be used to the risk, as Ukraine shows no signs of collapse, and the military situation in the Donbass, while highly volatile, is fading from the headlines (perhaps inappropriately so, but fading none the less).
In other words, investors may think that Ukraine has hit bottom and is rebounding. If that’s true, it spells good news for Ukraine in the years to come, but things are very difficult for the average Ukrainian at the moment, and a 17% inflation rate, while an improvement, is hardly good news for the Ukrainian citizen.
— James Miller