Download Economic developments in Ukraine in 2006

Economic developments in
Ukraine in 2006
D. Shemetilo, West LB
Major risks for economy
•
•
•
•
Political
Legislative
Demographic
Economic
PR-OU coalition (50% prob)
• Building a state not a nation
• Targeting EU
• Consolidation of country by resolving the
problem of Russian language and NATO
• Normalisation of relations with Russia
• Fiscal discipline
• Recovery of growth (5-6%) and lower
inflation (7-8%)
“ORANGE” coalition (20% prob)
•
•
•
•
•
Building a nation not a state
Targeting NATO
Growing tension in society
Deterioration of relations with Russia
Compensation of slow economic growth
through social benefits
• High low growth (1-2%) and high inflation
(12-13%)
Legal environment
• Development and harmonisation of the
legislation using the EU as a nominal
anchor
• Corporate legislation
• Legal enforcement
• Corruption
Economic Outlook
• Growth in services and domestic
consumption
• Lower export growth
• Increase in FDI
• Three years for structural reforms
Economic Outlook
•
•
•
•
2006 GDP growth
2006 CPI
Average UAH/USD
2006 FDI
2-3%
10%
5.05-5.09
USD4-5bn
Impact of the gas agreement
•
•
•
•
Positive for Ukraine
Long term positive for industries
Ukraine receives gas at USD95/thm3
Russia gains control over Ukrainian gas
re-export and domestic gas distribution
Structure of Ukraine’s Industry
Chemical and
Petrochemical, 7%
Ferrous Metallurgy,
22%
Fuel and Energy,
11%
Power Generation,
12%
Food Industry, 17%
Machine Building,
14%
Source: Ukraine’s MoE 2004
Ukraine’s gas balance
Gaz balance for Ukraine
Volumes in bcm, price in US$ per thcm
2005
2006
2006
2007
Consumption
Volume
Price Volume
Price Volume
Price Volume
Price
Industrial
34.6
31.0
27.9
25.1
… out of this power stations
5.0
5.0
5.0
5.0
Household consumption
17.7
18.0
17.1
16.2
Heating
14.4
14.9
14.2
13.4
State institutions
1.1
1.1
1.1
1.1
Technical gas for extraction and transportations
7.5
7.5
7.8
7.8
For production of liquid gas
0.2
0.2
0.2
0.2
Total domestic consumption
75.4
72.6
68.2
63.8
Re-export
6.0
0.0
22.0
15.0
Supply
Gazprom
20.2 50.0
16.5 95.0
Turkmenistan (FOB Russia)
38.0 75.0
40.0 95.0
Ukraine
20.2
20.0
20.0
20.0
Independent
11.0 160.0
73.0 95.0
73.0 95.0
Total Supply
89.4
76.5
93.0
93.0
Total gas balance
0.0
3.9
2.8
14.2
Change in storage
8.0
0.0
0.0
0.0
In storage
10.0
18.0
18.0
18.0
Source: WestLB