Investment in Ukraine’s fixed assets has reached $6 billion, up 23 percent compared to a year ago, while foreign money inflow has dwindled, according to the latest Ukrainian government report.
So far in 2017, investment has swelled in defense by 78 percent, agriculture by 41 percent, transport infrastructure by 35 percent, IT and telecom by 25 percent, industry by 24 percent and construction by 17 percent – all compared to the same period last year, Ukraine’s State Statistics Service reported on Aug. 29.
Private capital from companies and organizations were the major sources, accounting for 74.3 percent of the total volume, said the report. State and local budgets contributed only 7 percent.
Despite the growth, however, foreign direct investment in Ukraine, or FDI, dwindled by about $700 million, compared with 2016.
FDI in Ukraine as equity capital as of July 1 totals $39 billion, which is $1.6 billion more than in the beginning of the year, but less than at the same period last year, when non-residents put in $2.3 billion.
In the first six months of 2017, foreigners invested in Ukraine $710 million, while disinvesting $210 million. But the main gain was due to a foreign exchange rate difference, estimated at around $1 billion, which was “most likely related to the weakening of the U.S. dollar to major world currencies.”
The statistics service also reported that Cyprus-registered investors – at $290 million – accounted for 40 percent of total investment in the first half of 2017, while the share from the United Kingdom, with $160 million, was 22 percent and that of Dutch investors with $70 million was 10 percent.
The head of research at investment firm Concorde Capital, Alexander Paraschiy, says growth is driven by the demand for agriculatural products, favorable changes in state policy for gas extraction and defense industry investments and steady interest in Ukraine’s metal production.
“We expect this high investment activity to continue, though the second half of the year will have a high comparative base that will ease growth rates somewhat,” Paraschiy said in his company’s estimates, that analyzed the government’s paper.
By the end of 2017, the total amount of investments will increase by 17.8 percent, compared with the previous year, Concorde Capital estimated.
Kyiv Post staff writer Denys Krasnikov can be reached at [email protected].
