Ukraine has already started to count the economic cost of the novel coronavirus, and it’s not a pretty picture. Here are just some of the effects so far:
- Businesses and the entire economy are feeling the COVID‑19 squeeze. Ukraine’s GDP will decline by 4% at least, and by 9% if quarantine measures last longer than three months, according to Dragon Capital.
- Ukraine’s state budget deficit could grow from 2% of GDP now, to 7% by the end of the year, the government has said. Other experts say it could be even worse.
- A Gradus poll found that 57% of Ukrainians won’t have enough money to hold out for more than four weeks if the quarantine continues. Meanwhile, 7% out of those 57% said they can survive only for a few days.
- Some 600–700,000 small and medium sized businesses that employ an estimated 3.5–4 million people have stopped operation, according to the President of the Chamber of Commerce and Industry of Ukraine, Gennady Chizhikov.
- The government has established a $7.1 billion stabilization fund to combat the economic effects of the coronavirus. It says $3.5–4 billion is needed to fight the virus itself. The government has implemented some tax breaks and stopped collecting rent at state-owned farmland.
- The Ministry of Finance has been instructed to amend the national budget for 2020 in order to find savings of $1.7 billion
- The International Monetary Fund is in talks with Ukraine over increasing the size of its prospective line of credit to $10 billion. The IMF has $50 billion in rapid loans available to help developing countries like Ukraine fight COVID‑19, but said it is ready to utilize its entire $1 trillion lending capacity to fight the pandemic.
- The European Investment Bank agreed to lend an extra $40 million to Ukraine, and said it was negotiating with the government on how it could restructure its 6.4 billion euro investment portfolio here in order to further help the nation.
- The National Bank of Ukraine has said banks should ease lending restrictions for people and businesses. It has also made repeated moves to stabilize and defend the national currency, the hryvnia, which stands at about 28.11 against the dollar, down 11% from this year’s high of 25.
- To raise funds, the Finance Ministry has been placing hundreds of millions worth of Ukrainian government bonds on forex markets. On March 25 alone, it sold almost $1 billion at auction.
- Ukraine’s key commodity exports, metals and grains, are vulnerable if the price of oil continues to fall, and consumer demand with it. Grain exports alone account for a third of Ukraine’s foreign exchange earnings on the global commodity markets.
- As a further indicator of the business outlook, studies show that Ukrainian hotel occupancy is currently down 86% compared to the same time last year, while airspace traffic is currently 87% down. All airports in Ukraine except Kyiv Boryspil are closed.
