Ukrainian public optimism highest in eight years, survey says

About 35% of Ukrainians believe the country is moving
in the right direction, the highest level in eight years, according to a poll
conducted by the Rating Sociological Group between July 6 and 10 involving
2,000 respondents. About 39% of Ukrainians believe the country is moving in the
wrong direction, close to the eight-year low reached in June 2019. The most
optimistic segments are residents of the western regions, youth and supporters
of President Zelensky, the survey said.

Ukraine’s illegal economy in 2018 reached its lowest
level in nine years, the Ministry of Economic Development and Trade reported
this month. The “shadow economy” accounted for 30% of official GDP, or 2pp
lower than 2017, according to its quarterly report on illegal activity. “Such a
level of legalizing the economy can be considered to be among the criteria for
estimating the effectiveness of introduced reforms and society’s perception of
them,” the report said.

Newoldstamp, a Lviv-based Internet startup, won a
contest held by the U.S. venture capital fund, 500 Startups, earning 150K in
financing in exchange for a 6% stake, the epravda.com.ua news site reported on
July 23, citing the ain.ua news site. Newoldstamp is an online service that
generates professional e-mail signatures that are used by corporate employees.
Its founders will spend four months training in San Francisco before gaining
the financing to develop its service. 

Zenon Zawada: The high
optimism of Ukrainians is based on a radically new personality becoming
president, who has no ties to the Old Guard political establishment and
business elites. It is also based on the results of the parliamentary elections
held this weekend, in which scores of newcomers – also with no ties to politics
and business – swept out deeply entrenched politicians and entrepreneurs.
Indeed the changes produced by these elections are just as dramatic as those in
2014, if not more so.

Unfortunately, we are confident that this optimism
will evaporate by the year end. By that time, Zelensky should have secured the
next IMF tranche, to his advantage, but will be confronted with a likely halt
in natural gas supplies from Russia, which the government is already preparing
for. He will be faced with the difficult decision of whether to capitulate to
Russian geopolitical demands, eroding the Western-oriented segment of his
electorate, or deciding to continue to resist Russian pressure and extend the
warfare, eroding the support his Russian-oriented segment.

Judging by the first two months of his presidency,
Zelensky is sincere about fighting corruption to a far greater extent than his
predecessors. But we expect much resistance in the coming months from those
benefitting from the corruption, who will be allying themselves with Zelensky’s
political opponents and lobbing their own corruption accusations against the
president and his team. This will also damage his support, though his inability
to gain results could be compensated by some high-profile prosecutions.