Igor Mazepa estimates that introduction of martial law in 10 regions of Ukraine could cost half a billion dollars for the economy of Ukraine

I estimate the direct and indirect losses for these attempts to introduce martial law at half a billion dollars. And that’s not a small sum for a country whose economy earns little more than USD 100 bln annually. These are also losses for our budget, as well as for our country’s defense capability – comments Igor Mazepa, investment banker and CEO of Concorde Capital investment company.

The typical investor abroad, to a large extent, will never figure out what’s truly happening in the country. It’s enough for him to read the newspapers headlines about Ukraine, which will give reason enough to turn to thousands of other investment ideas in scores of other countries, where there is no martial law. The reaction of those who have already skimmed something off their Ukrainian assets can also be compared to UEFA’s reaction: “selling” before even understanding the essence of what’s happening in the country.
Withdrawing from investments or postponing them won’t be without consequences for our economy: at minimum, the cost of international borrowing for Ukraine has already grown. And our government will still need foreign debt next year.

In a situation of indecision, Ukrainian consumers and businessmen sharply reconsider their priorities, giving preference to cash instead of bank deposits, basic staples instead of goods of long-term use the transfer of money to safe havens instead of investment in new capacities and the U.S. dollar over the hryvnia. This all leads to money laundered from the banking system, where they would have multiplied and created additional value for the economy. In its turn, this provokes a decline in business activity, which will ultimately be negatively reflected in the indicators of our economic growth, which didn’t shine with optimism even without all this.

Of course, there is a slim hope that these losses won’t be irreversible, and that our political elite will nonetheless be able to turn this negative into a positive. At minimum, that would involve decisively resolving Russia’s blockade of ships in the Azov Sea, as well as securing the supply of new resources to bolsert Ukraine’s defense capability. At maximum, that would involve blocking or seriously delaying the introduction of Russian pipelines, which are obviously aimed at reducing our economic position.

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