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4.3 Fixed investment
Ukraine capital investment drops 36% in 3Q20. Ukraine’s real capital investment declined 36.2% y/y, the State Statistics Service reported on November 24. The decline deepened from 34.4% y/y in 2Q20 and 35.5% y/y in 1Q20.
The largest declines in capital investments in 3Q20 were observed in construction (-54.3% y/y), trade (-51.8% y/y), and agriculture (-41.6% y/y).
In 9M20, 69.2% of capital investment was financed from own funds of enterprises and organizations. Local and state budget financed 8.6% and 6.0% of all capital investment, respectively. In addition, 7.5% of capital investment was financed through bank loans and other lending.
Quarantine restrictions and global economic recession are important factors of investment decline in Ukraine. However, these factors are reinforced by the disillusions of Ukrainian businessmen in the ability of the Zelenskiy administration to fulfill promises of radically improving the investment climate in the country.
The dearth of investment will be the major factor behind the economic recession in Ukraine this year. We expect Ukraine’s GDP to decline 4.6% y/y in 2020 (vs. 3.2% y/y growth in 2019).
27 UKRAINE Country Report December 2020 www.intellinews.com
