The dynamics of investment recovery in Ukraine remains extremely unsatisfactory, jeopardizing the pace of the nation’s economic revitalization. This was stated by MP Serhiy Lovochkin.
“The dynamics of the investment recovery remains extremely unsatisfactory, and the lending portfolio has shown some growth from such a small base that given the lack of progress in resolving the conflict in the Donbas, there is no more talk about any foundation for revitalizing the economy in the next years,” Lovochkin said.
Due to the low comparative base, the inflow of FDI and the growth of lending are insufficient to restore investments to pre-covid level, the MP said.
“The tendencies of de-capitalization in Ukraine are threatening. At the end of 2020, the share of gross fixed capital formation (GFCF) in GDP decreased to 13 percent of GDP, and at the end of nine months of 2021 — to 11.3 percent. This is a historical low! The GFCF did not fall this low even amid greater crisis and combat activities in 2014–2015,” the opposition politician said.
Lovochkin believes that sustainable rates of economic growth require the GFCF-to-GDP ratio within 20 percent, and for accelerated economic growth its share should exceed 20 percent (in the fast-growing countries of Southeast and South Asia, the share of GFCF is 25 percent and more).
“Structural problems associated with low investment levels are not going anywhere and will carry over to next year. The continuation of the conflict in the Donbas, unpredictable investment climate with NSDC sanctions that can be imposed against anyone anytime, tougher tax administration, poor protection of property rights, low government support for basic industries and small and medium-sized businesses — all this will continue to undermine investor expectations, causing slow recovery of investments even to the pre-covid level, not to mention the pre-war level. And if there is no investment, there is no long-term basis for economic growth,” the politician emphasized.
According to him, all this indicates that the government is not just ineffective and unprofessional, but purposefully destroying the foundation for the future development of Ukraine.
“We are advocating immediate resignation of the Cabinet. Ukraine needs a government of professionals that will be able to propose action program for the development of the nation, provide support for and increase public investment in the development and modernization of the manufacturing industry. Not a single nation in the world has achieved economic success without investment. The task of attracting them should become one of the top priorities for the new government,” Lovochkin concluded.Follow @serhiylovochkin