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| 9/17/2009 |
| Renaissance Capital: Ukraine’s bottomed out, macro fundamentals show evidence of recovery |
Kiev, September 17, 2009 – Renaissance Capital published its new comprehensive report on Ukraine’s economy which includes an analysis of the political situation, economics, fixed income strategy and a credit guide.
Key findings of the report are that Ukraine’s economy has hit its bottom and is showing macroeconomic evidence of a recovery. Renaissance expects the economy to show a positive dynamic in 2H09 on the back of improvements in the global markets as well as a relatively low comparison base. Ukraine’s GDP decline is expected to slow down to 9.8% this year and GDP is expected to grow in 2010 by 2.1%.
Ukraine has been one of the worst-hit by the financial crisis. However, in recent months, both industrial production and retail trade have shown positive growth rates relative to the trough. Furthermore, positive trends in the metals and mining and agriculture sectors support an early recovery.
Renaissance Capital also finds that Ukraine’s balance of payments demonstrated a serious improvement, with the current account deficit all but evaporating and the capital account performing far better than was expected by the market.
“We see growing interest in Ukraine and a delayed demand from foreign investors”, – says Peter Vanhecke, CEO, Renaissance Capital Ukraine.
Clearly risks remain, and one of the most important could be a disorderly devaluation of the national currency. This risk cannot be dismissed out of hand due to continued capital account pressures and inconsistent policies of the National Bank of Ukraine but remains unlikely.
The situation in the banking system is also difficult in terms of asset quality, but Renaissance Capital expects no further instances of a bank-run or any high-profile bank failures. Continued stabilization in the banking sector remains the key factor determining the scope of future growth.
For additional comments and the full version of the report, please contact Renaissance Capital’s Press Office.
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