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5.3 FDI
FDI
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 FFF
Net FDI (US$bn) 9.2 9.9 4.7 5.8 7 7.2 4.1 0.3 2.9 3.4 4.3 4.3 4.3
Net FDI (% of 6.4 5.4 4.1 4.2 4.3 4.1 2.3 0.2 3.3 3.7 4.3 3.9 3.5 GDP)
C/A bal. + net FDI 2.8 -1.6 2.6 2 -2 -4.1 -6.9 -3.3 3.1 0.3 1.6 -0.3 -0.1 (% of GDP)
Source: ICU
To encourage more foreign and domestic investment, Ukraine is lowering its ‘investment nanny’ threshold from $100mn to $30mn, Zelenskiy told reporters on May 19. In coming days, the Rada will receive a bill to create the position of ‘investment nanny’ -- a man or woman empowered to cut red tape to advance investment projects.
Foreign direct investment (FDI) into Ukraine was starting to grow in 2019
as the country made real progress with reforms and stabilising the economy. Ukraine attracted $1,245mn in the fourth quarter of 2019, the latest data available – the highest level since the first quarter of 2016.
But the investment case for Ukraine has taken a number of blows this year in addition to the double headed oil price shock and coronacrisis that would have subdued FDI, but now have probably killed it off entirely until at least the end of this year.
The optics of Zelenskiy decision to sack the reformist government in March did not play well with investors and the antics of oligarch Ihor Kolomoisky and his battle to regain control over PrivatBank also make a mockery of the rule of law.
However, Ukraine is still in the early stages of its catch up growth and multinational retailers in particular have been attracted by the fact that incomes have doubled in the last few years to c.$400 per month. Typically these big players are in the vanguard as they attempt to secure market share very early on and are prepared to wait for the rest of the economy to develop. The big names like Ikea and Metro have already moved in while investment banks have been investing into new shopping malls and retail outlets.
The current crisis will stymie these plans, but not kill them off. After all these big multinational investors have been down this road many times and are quite used to periodic crises in all their markets.
36 UKRAINE Country Report June 2020 www.intellinews.com
