The reduction of industrial production has become a total collapse, but in October also fell by as much as 5%, while a decrease is observed since June. In just 11 months of this year, industrial production declined compared to the same period of 2018 1.2%. In 2018, we will remind, the industrial production grew by 1.1% but that after a stiff decline too.
Still not a disaster, but...
"The manufacturing is, to put it mildly, not in the best shape," says the expert of the International centre for policy studies (ICPS) Egor Kiyan. In conversation with "an Apostrophe" he noted that the current decline, if you look at the trend throughout the year is noticeable, but not yet critical, "But in the long term, we feel the pain".
According to the expert of the Institute GROWFORD Alexei Kusch, the Ukrainian authorities are trying to present the collapse of industrial output in the country as an element of global trends. Indeed, the growth of industrial production in the world in 2019 has slowed significantly. The expert believes that the main reason for this deceleration has become a global transition to a new technological order, which naturally is accompanied by the breaking of old production chains.
The industry remains extremely important, as is stabilizing link, a kind of "starter" of the economy. "But in the case of Ukraine, global causes (fall of industrial production approx. "Apostrophes") was not crucial, says Alexei Kusch. The main reason anti-economic policies of the state."
In particular, according to him, the Ministry of Finance launched the pyramid of government bonds of internal state loan (government bonds): "the higher interest rates on government securities, the more capital is flushed out of the small and medium-sized businesses, because these rates de-motivate investors to invest in the real sector of the economy."
Thus, the Ministry of Finance, in fact, turned into a giant vacuum of money supply in the domestic capital market, including the so-called portfolio investments, as nonresidents could instead of government bonds to buy corporate bonds. But companies can't compete with the government for the proposed interest rates.
In addition, this policy of the Ministry of Finance has led to the artificial strengthening of the hryvnia, "is that for a commodity based economy lethal injection. As the level of added value is very low in the structure of the finished product, the strengthening of the hryvnia eats almost all the profitability of exporters."
Strategic vision is missing
The current deplorable situation in the industry largely due to the fact that the businesses did not carry out the modernization of production, therefore they lose in competition with similar businesses in other countries. And every year the gap increases. But the government did not seek to improve the situation.
"The main focus of the state remains in the agricultural sector. About the manufacturing no one thinks, and it is now perceived as a milking cow only as a way to fill the budget by taxing it, and not always the most effective way," said Yegor Kiyan.
"The Ukrainian economy is not growing and one of the reasons lack of strategy of development of the country, the lack of understanding of the role that Ukraine should play in the European and, more broadly, the world economic map said "Apostrophe" the Director of economic programs of the analytical center "Ukrainian Institute for the future," Anatoly Amelin. This is the task of government, because such a strategy allows to use these or other incentives for economic development. When so-called libertarians screaming that the state should not give any incentives they introduce themselves (and others) misleading, because, as history shows, all developed economies of the world become established due to protectionism and pragmatic national policy." Another key element of economic strategy, according to the specialist, is the program for industrial policy, as in the industrial sector, a high added value. The lack of industrial policy in Ukraine we have seen in the automotive industry. Ukraine could develop the production of electric vehicles, and specialized companies are willing to do it, but the government lifted the VAT (which is 20% approx. "Apostrophes") on imports of electric cars. "Thus, the Ukrainian electric cars already lose on the VAT amount electrocore, which is imported," said Anatoly Amelin.
According to Alexei Kusch, according to the UN, more than 100 countries generating 90% of world GDP are attracting investment on the basis of sovereign national industrial policy "Industrial policy is like a road map for the investor, which he compares, what industries are in this country to develop. Without an industrial policy, it is impossible to develop a good investment policy."
"The lack of policy, lack of industrial policy, lack of resource to upgrade we have very expensive loans, and appreciation of the hryvnia against the dollar led to the fact that we are losing even more rapidly our industry. And if the situation does not change, 2020-2021 years can be critical for the Ukrainian industry", says Anatoly Amelin.
Such a government we don't need
But are we ready for such steps with the current Ukrainian government? This is highly questionable. So, the Deputy Minister of economy Sergey Nikolaichuk, commenting on the decline, asked the rhetorical question: does Ukraine need, in principle, manufacturing policy?
"This is the Nikolaichuk, about which the Minister Milovanov wrote that he managed to poach from the national Bank very large salary recalled Alex Kush. But not far removed from it and the Minister, which sets no less than the perennial question: do we need entrepreneurs? Because of this we have such a result."
Amelin is also skeptical. According to him, the government team did not consider it necessary to develop a strategy, arguing that in a rapidly changing world in which we live today, it is impossible to engage in long-term forecasting.
"But the strategy is not a prediction. It is programming of the future. But because they (the government) are only solving tactical problems, they in process create strategic problems that have no solutions. And until we change the mentality of our government, we are, unfortunately, likely do not have the future", concluded the expert.
We will add that a month ago "Apostrophe" wrote that President Vladimir Zelensky extremely dissatisfied with the work of the government and personally Prime Minister Alexey Goncharuk. The sources did not rule out that the resignation of the government or, rather, some Ministers will be held before the new year. Lately it has been more and more evidence, although at the official level did not yet been reported. So, perhaps soon we will witness high-profile resignations of the representatives of the "government of technocrats". But nobody knows who will replace them, and we will see if the replacement have a strategic vision of development of the country.
I wonder if Pelosi will try to make that another impeachable offense? Her other articles of impeachment, are just as stupid.
Wrong......Ukraine has a dedicated development policy: ripoff US taxpayers for billions in foreign aid
they recycle hundreds of millions back to connected US politician and their bagmen to get MORE aid.
Consequence of a corrupt society.
I dont know who I am madder at, the corrupt politicians, the media or the ignorant voting public......
People need to be hanged and their wealth confiscated.
Ukraine’s economy crashed in 2008.
As far as I know - after 12 years - their inflation adjusted GDP is still below what it was in 2007.
The Ukraine is Weak!
Oh, maybe its because they arent paying democrat lawmakers kids enough.
I know Im not being fair by blaming all Ukrainians for corruption, but my President was just impeached because of them. Every time I hear the word Ukrain my stomach turns.