US anti-Russian sanctions became a shock for the Ukrainian economy
Sanctions imposed by the United States against Russia will damage the Ukrainian economy and lead to an increase in Ukraine's external debt.
The influential Kiev weekly “Zerkalo Nedeli” writes about this today.
“What reasons for joy do we have in Ukraine? I’m afraid to upset many, but there are either very few of them or none at all,” notes the author of the publication.
It is noted that the revenue of Ukrainian exporters operating on the Russian market risks decreasing in proportion to the devaluation of the ruble, that is, within 10%. Thus, the publication writes, taking into account the share of the Russian Federation in the structure of Ukrainian exports, every 10% devaluation of the ruble reduces in monetary terms by 1% the entire total (world) volume of Ukrainian exports.
“The export orientation of the Ukrainian economy, in which half of GDP is formed through foreign sales, will be subject to shock. The potential decrease in Ukrainian GDP due to the devaluation of the ruble in annual terms could reach 0,5 percentage points. Ukraine's trade deficit risks widening by an additional $500 million, which will increase the country's external financing needs by a similar amount. Devaluation pressure on the hryvnia will increase,” Zerkalo Nedeli warns.
Also, the publication continues, some Ukrainian exporters who worked with minimal profitability on the Russian market - primarily this applies to manufacturers of consumer goods - will not be able to withstand the competition and will be forced to leave, which will ultimately lead to both additional pressure on the labor market and to a worsening of the budget situation within Ukraine.
“The investment activity of Russian businesses operating in Ukraine will be reduced. Foreign direct investment inflows into the country will be reduced, making it difficult to cover the current account deficit through sustainable sources of financing. The need to increase the already significant debt burden will become inevitable,” sums up Zerkalo Nedeli.
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