FDI to Ukraine increase 1.5x in 2015

Capital inflow in Ukraine increased 53.5% yoy to USD 3.8 bln, according to UkrStat report on Feb. 17. The main inflow was from Russia (USD 924 mln into the banking sector) and from the Netherlands (USD 743 mln into telecommunication).

FDI stock in 2015 decreased 5.3% yoy (USD 2.9 bln) to USD 51.2 bln. The main reason for the decline was hryvnia devaluation, which shaved off USD 5.0 bln of FDI value. A USD 891 mln capital outflow as well as a USD 473 mln decrease in external liabilities also contributed to the outcome.

In 2014, FDI stock plunged 19.1% yoy (USD 12.8 bln) to USD 54.5 bln – also due to the exchange rate difference. In particular, the weakening of the hryvnia  ate away USD 12.3 bln of FDI value.

Alexander Paraschiy: Despite increased capital inflow in 2015, we can hardly say there are any positive trends. Investments in the banking sector were related to recapitalization needs, while investments in telecommunications were the consequence of 3G mobile license sale. At the same time, we do not observe crowds of investors at the border of the country, due to a hostile business environment and large country risks.  At the same time, we do expect some increase of investments in 2016, fuelled by the banks’ recapitalization needs and possibly by the government’s privatization efforts.