Ukraine capital investment drops 36% in 3Q20

Ukraine’s real capital investment declined 36.2% yoy,
the State Statistics Service reported on Nov. 24. The decline deepened from
34.4% yoy in 2Q20 and 35.5% yoy in 1Q20.

The largest declines in capital investments in 3Q20
were observed in construction (-54.3% yoy), trade (-51.8% yoy), and agriculture
(-41.6% yoy).

In 9M20, 69.2% of capital investment was financed from
own funds of enterprises and organizations. Local and state budget financed
8.6% and 6.0% of all capital investment, respectively. In addition, 7.5% of
capital investment was financed through bank loans and other lending.

Evgeniya Akhtyrko: Quarantine
restrictions and global economic recession are important factors of investment
decline in Ukraine. However, these factors are reinforced by the disillusions
of Ukrainian businessmen in the ability of the Zelenskiy administration to
fulfill promises of radically improving the investment climate in the country.

The dearth of investment will be the major factor
behind the economic recession in Ukraine this year. We expect Ukraine’s GDP to
decline 4.6% yoy in 2020 (vs. 3.2% yoy growth in 2019).