Page 42 - UKRRptJul20
P. 42
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
There was a net outflow of foreign direct investment (FDI) from Ukraine in the first quarter of this year of $1,451mn reversing the trend of inflows of the last several years, according to data from Ukrstat.
Ukraine has been attracting foreign investment but at disappointingly low levels. New FDI in 2019 was $1.9bn, the State Statistics Service said. About one quarter, or $506mn, was from Cyprus, presumably offshore Ukrainian or Russian money. The next four sources were: Russia -- $396mn; the Netherlands -- $262mn; Britain -- $212mn; and Germany -- $119mn.
The only sector to attract substantial FDI has been the renewable power sector that has seen more than $4bn of inflows in the last two years to take advantage of the attractive tariff regime. However, the government has undermine confidence in the sector after it decided to reduce the tariffs to the outrage of investors. A compromise was struck in June, but the investors remain unhappy and some are still contemplating of taking their complaints to international arbitration.
The investment case for Ukraine has been in decline since U krainian president Volodymyr Zelenskiy shook up the government with a major reshuffle on March 3, that included the sacking of the technocratic Ukrainian Prime Minister Oleksiy Honcharuk.
The arrival of the coronavirus (COVID-19) epidemic has only undermined the case for investment further. And Ukraine’s image took a fresh blow with the governor of the National Bank of Ukraine (NBU) Yakiv Smolii’s unexpected decision to quit on June 2 citing “systemic political pressure” as the reason for his departure.
In May there was a fresh $323mn net outflow of FDI that followed on from an inflow of $360mn in April.
42 UKRAINE Country Report July 2020 www.intellinews.com
