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«AgroInvest» — News — Export development: Ukraine walks along the globe

Export development: Ukraine walks along the globe

2013-11-12 12:26:08

In 2013 the world economy has been recovering from the ongoing crisis and preparing to the revival of 2014. No surprise that against this background the export of Ukraine does not demonstrate breakthrough rates: for 8 month of this year it has dropped by 9.1%. Moreover, trade wars and aggressive trade policy of Russia do not help the domestic export dynamics either.

Nevertheless, for this period the country has managed to preserve exports to some significant focus areas: thus, export to Europe has remained at the level of January-August -2012 ($11 bln), and has even grown to some countries, like Hungary (by 4.7% to $1056 mln), the Netherlands (by 39.4% to $620 mln), Italy, France, etc. (see the table below). Among other destinations there are China with the growth of Ukrainian import by 46.4% to $1815 million and Turkey (+2.3% to $2527 mln).

Much of the growth is owed to such traditional commodity groups as metals, agriculture production, chemistry. Other supply groups, like engineering production and equipment, keep developing. Thus, realization of Ukrainian power engineering equipment on Chinese markets has grown fourfold for the last eight months and takes 8.7% in the structure of export to China.

Contrary to popular belief that our domestic equipment is noncompetitive in the European Union, the export of power engineering equipment keeps growing to such developed countries as the Netherlands and France, while engineering goods are achieving strong positions in the Baltic countries' markets.

Amid world growth

Experts note that further advance of Ukrainian enterprises on foreign markets will depend on the global economic recovery in 2014. As for developed markets, IMF forecasts that the next year growth may speed up to 2%, after 1.25% in 2013. In particular, it concerns the euro zone, where economic recovery is expected at the level of 0.9-1% in 2014, with further speedup to 1.5-1.7% in 2015.

If last year Europe held 25.3% in the cost structure of Ukraine's export, for the eight months of this year the share has reached 26.8%, and considering trade sanctions of Russia, it may even grow more by the yearend. The list of countries of our export growth includes several countries of the Central-Eastern Europe, executive director of the International Bleyzer Fund Oleh Ustenko says.

The economic situation is rather stable in these countries, especially in Poland, which has not suffered the recession and has become the largest consumer of our domestic production ($2576.2 million in 2012).

The leading emerging countries, however, demonstrate slow economic dynamics in 2013. Thus, GDP growth in China has made 7.5% against 7.8% of last year, in India - 5.3% against 5.4% of last year, etc. At the same time, Ustenko notes that the slowdown is not significant and will not affect the recovery of the global economy, which means that following a smart marketing policy Ukrainian suppliers have every chance on foreign emerging markers. In particular, it concerns export of agriculture production (for example in 2013-2014 marketing year it is planned to export about four million tons of grain to China), poultry and other foodstuffs.

Gradual economic recovery of the US also contributes to the revival of international trade. In this respect, it is worth mentioning that Brussels and Washington continue talks on bilateral free trade area, which may result into 120-billion-euro economic benefit for Europeans and 90-billion-dollar benefit for Americans. Creation of the transatlantic FTA will spur not only the economies of these two parties, but also the whole world trade, Kyiv included.

Areas of focus

Speaking about Ukraine's free trade area with the EU, in 2014 it may revive the domestic export to Europe by 10-15%, president of the Center for market reforms Volodymyr Lanovyi says. Moreover, signing of the Association agreement will launch the process of modernization of Ukrainian economy, which in turn will force domestic producers to improve quality of goods and services, including better wrapping, in order to be able to compete with EU products on both domestic and foreign markets.

Moreover, Ukraine must adapt about 400 regulations, directives and other legal acts of the European Union, which will enable our producers to improve the quality of goods and services in accordance with the world standards and to become more competitive both on CIS and world markets, experts say. European standards work in the developing countries as well, and the European integration will throw open the gates of commerce for our production.

Besides, already in 2012 the realization of Ukrainian goods on African markets alone increased by 68.6% (to $5.6 billion), and in both Americas - by 2.2% (to $2.6 billion). Kyiv does not focus only on Europe, but aims for all possible markets, considering that the global economic crisis is not over yet and we must use all available trade opportunities.

In turn, export recovery will improve Ukraine's GDP rates, the latest Rapid Growth Markets Forecast by Ernst & Young says. In particular, the company forecasts GDP growth of 2.5% in 2014 and then a pickup to almost 5% in 2015, regardless of current difficulties of the country. Moreover, corporate loan rates are expected to drop, which in turn will "cheer up" the real sector and attract new investors, Ernst&Young report reads.

Thus, in 2014 Ukrainian economy has every chance to recover, considering that amid global economic revival and forthcoming European integration the demand for our goods grows and competitiveness of our production improves.

Ukraine's export growth by countries for eight months of 2013, $ million

 

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