Page 54 - Eastern Europe Outlook 2020

Since the marketing year started on July 1, 2019, Ukraine’s world exports of grains and legumes are up one third y/y, to 27.4mn tonnes, according to UkrAgroConsult. This is about half the USDA forecast of 55.5mn tonnes for the entire marketing year, up 11% over the previous year’s 50.1mn tonnes.
Setting a new record, Ukraine exported $20.2bn of agricultural products through to November in 2019, up 7.4% y/y, reported the Institute of Agrarian Economy. The top three categories were; grain – $8.6bn; oils – $4.2bn; and oilseeds – $2.3bn.
Ukraine’s dry autumn caused a nearly 10% drop in winter wheat sowing, APK-Inform reported. Some regions reduced the winter wheat area by 22%-25% while sowing in Kyiv region contracted by 39%, the consultancy said. “Completion of sowing in most areas took place practically in dry soil,” it said. “Only due to strong fog and abundant morning dew in many areas (helped) form small moisture reserves in the upper layers of the soil.” In 2019, Ukraine harvested 28.1mn tons, 14% more than in 2018. This winter, about 60,000 square kilometers are sowed in wheat, an expanse about the size of Latvia.
● Metal & Mining
China’s economic slowdown and falling demand for steel, pushed Ukraine’s November steel production down 21% y/y, to 43,800 tonnes​. “This is the lowest level of steel output in the modern history of Ukraine’s economy,” Alfa analysts wrote, citing flash data from UkrMetalurgProm, Ukraine’s steel association.
With a global slowdown on the cards for 2020 analysts don’t expect the commodity price to recover.
● Retail
Income growth was accelerating towards the end of 2019 as the benefits of growth trickle down to the population and a shortage of skilled workers, after some 20% of the workforce emigrated to neighbouring EU countries, has been pushing wages up.
But with average wages of only $470 per month as of December 2019 wage growth still has a long way to go. In per capita PPP terms incomes are on the order of $9,500 per year, which is less than half of not only Russia, but also half of wages in Kazakhstan and Belarus.
Businesses are widely expecting a consumer-driven boom to take off in Ukraine at some point as it remains the last CIS country to have its “catch up” growth and this process could last a decade. Many of the multinational retailers have already started to move into Ukraine as the game is to grab as much market share in the early phases while it is still up for grabs. This means the big multinationals are usually early movers with their investors as with their deep pockets they can afford to be early, but as they are strategic investors they cannot afford to be late.
McDonald’s plans to expand its restaurants in Ukraine next year from 90 to 100​, Yuliya Badritdinova, the new managing director for McDonald’s
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