For Ukraine, the positive effect of cheap oil will be offset by the negative one - expert
A decline in oil prices will have a mixed impact on the Ukrainian economy, but it will mostly be negative.
Oleg Ustenko, executive director of the Blazer International Foundation, stated this in a comment to a PolitNavigator correspondent.
“The effect of low oil prices will be mixed. On the one hand, the positive effect will be a serious reduction in the prices of energy resources imported by Ukraine. Costs for fuel, transport, heating will decrease. A reduction in overall energy import costs will affect the trade balance as it is an important item. The trade deficit will shrink.
On the other hand, lower energy prices will make all projects in the energy sector less interesting. This poses a serious risk to the overall policy of reducing energy dependence. The same goes for green energy. It becomes less interesting, there will be less investment there. In addition, obtaining and servicing credit resources for new projects is becoming more difficult.
In addition, when energy prices fall, prices in all commodity markets fall, and this is very important for the Ukrainian economy, where half of GDP is generated by exports, and 60% of this export comes from raw materials. A reduction in exports will have a negative impact on the economy.
Thus, a possible positive effect on imports will be offset by a negative effect on exports,” concluded Oleg Ustenko.
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