Ukraine FDI grows USD 1.2 bln in 3Q13

Net FDI to Ukraine jumped to USD 1.2 bln in 3Q13 (from USD -412 mln in 2Q13), according to state statistics reported on November 14. Net FDI inflow in 9M13 amounted to USD 1.2 bln, with net inflow from just three sources — Cyprus, the British Virgin Islands and the Netherlands – accounting for USD 1.7 bln.

Alexander Paraschiy: The sudden FDI surge – after a USD 412 mln FDI drop in 2Q13 – has no basis in real business activity. The environment remained unattractive and there were no significant deals. Once again, the main investment flows to the country came from Cyprus, where Ukraine’s oligarchs park much of their capital. Thus, the likely explanation is non-transparent transactions between oligarchs, which are classified as FDI only from a statistical point of view.