Published data of the Ukrainian economic statistics for the 10 months of talking about the beginning of a serious crisis in the industry, which may be a knock-on effect on the rest of the industry. These are the first results of activities of the libertarian government, its economic policy and legislative initiatives in the notorious “turbo mode”.
So, by the end of October 2019 the total decline in industrial production amounted to 5%. As statistics show, the average industrial enterprise in the past year worked in the black just three months – from March to may. And it was connected exclusively with established temporarily favorable market conditions in the global market. But since the summer started stagnation, which gradually began to move to the stage of the crisis.
So, if in July the industrial enterprises showed minus 0.2%, in August – already at 1.7% in September and 1.1% in October to minus 5%. The most critical trends emerged in the automotive industry, which subsided in 10 months by 15.4% in the mining and metallurgical complex, where the fall amounted to almost 12% and in the textile industry – minus 6%. Yet the incipient bewildering trend can be mitigated at the expense of producers of computers, electronic and optical products (growth of 28.7 per cent), chemical (plus 3.5%) and pharmaceutical products (plus 1.3 percent). But also here not all so smoothly.
The production of computer hardware is developed in parallel with IT sector, which is really in the Ukraine due to the extreme cheapness of labor – programmers – in recent years, actively expanding. But this is quite specific and affects a tiny fraction of the population. And the indicators of the chemical and pharmaceutical industry is not so rosy. And at any time, a Domino effect can easily turn pros into cons.
Almost all the leading sectors of the Ukrainian economy is critically dependent on exports. Any fluctuation in the international market is able to instantly stop an entire industry. In fact, commodity export-dependent nature of the economy is not something special for the country. Unfortunately, this is typical of all States emerging from the dismantling of the Soviet economic model. But as for Ukraine, here export dependence superimposed on the five year plan of the anti-Russian madness in economic policy. And with the arrival of reformers from the Soros team of see in the government is added to this policy of incentives for importers.
The result of anti-Russian economic policy was a systemic crisis in the Ukrainian mechanical engineering. Today, for example, the production of transformers, electrical equipment, equipment for industrial enterprises fell significantly. Ill-fated Association with the EU are unable to cover the decline in the Russian direction, but on the contrary aggravated the commodity structure of the Ukrainian economy.
Just in time for the Ukrainian political changes this year on the world market began to appear negative trends. Judging by the statements of the IMF and the world Bank, in 2020 may escalate the situation with the global trade wars (US-China, Europe-USA, USA-Canada).
One of the first noticeable fever metal market. Today prices fell to a three-year low on world markets quotes for the metal with the most minimal of 2016. According to the world steel Association Worldsteel, as a result of the metallurgical companies around the world began to reduce production and cut staff. 38 of 64 countries-steel producers have already reduced production volumes. The situation on the global metals market continues to deteriorate, collapsing prices for Ukrainian products. Only from 15 to 22 November, the value of the composite price index on the Ukrainian market of metal products has decreased by 0.02%. Most sunk the price of seamless pipe (0.68% or 237 UAH per ton) and cold rolled sheet fell by 0.13%, or 27 hryvnia per ton.
In this respect it is worth noting that the Ukrainian metallurgy recent years and so was not working at full capacity. And the periods of dynamic development in the 2000s was associated exclusively with the growth of demand for rental and temporary inability to meet it from the side of the leading steel giants in the world. Not surprisingly, dependent on the export of Ukrainian metallurgy in 9 months of 2019 in foreign markets were able to realize the order of 82,8% of all steel produced.
As in other sectors, for metallurgists particularly critical was this autumn in October and September, steel production in the country fell by 10%. This has already led to a halt in Ukraine part of the capacity of the metallurgical enterprises as the Dnieper metallurgical plant (g. Kamenka, Dnipropetrovsk region), the Dnieper metallurgical plant (str) and Kurakhovskaya “Electrostal” (Donetsk region).
According to the head of the “Ukrmetallurgprom” Alexander Kalenkova, at the end of September all Ukrainian metallurgical enterprises worked at a loss, as a result, production decreased by about 9%. The same is said of adviser relations with the authorities “have Acelormittal Krivoy Rog” Vladimir Tkachenko: “If in the first half of last year we made a profit of UAH 4.2 billion in the same period of 2019 – a loss of 79 million. At the end of the first quarter of the remnants of unsold steel products to the warehouses of the company increased to 419 thousand tons, which is about 273 thousand tons more compared to the same period last year. And forecasts are disappointing: in the third quarter, we see that prices and demand for steel products continued to fall, and the expectations of a global recession stronger.”
Because of the financial crisis, the company “Metinvest”, owned by Vadim Novinsky and Rinat Akhmetov, announced a reduction of 30% in the next year of his administration and the termination of some investment projects. These measures will be introduced at all enterprises of the company, including “Zaporizhstal”, “Zaporozhkoks”, and “zaporozhogneupor”. As noted on this occasion, the Metinvest CEO Yury Ryzhenkov, the crisis will be the “hard for the last 10 years.”
There was an interesting situation in the “Interpipe” company, specializing in the production of pipes and wheels for rail transport, whose founder is Victor Pinchuk. The failure of the state program of increasing the production of gas, “20/20” has led to a major revision of the development strategy of the subsidiary (UGD), including a sharp reduction in plans for drilling new wells this year and next. The main supplier of pipes for the UGD was the “Interpipe”. “For us, it was a shock when UGD decided to drastically reduce its plan for drilling. We, knowing the needs of the flagship of the Ukrainian gas sector, and increasing our power pipe, bought a new threaded machines, but now there is such an incomprehensible pause”, – complains on this occasion, the Director for economy and Finance of “Interpipe” Denis Morozov.
In the end, the inner pipe market in Ukraine has narrowed down considerably for this company. The European market continues to be restricted by quotas, and the us – duty. To stay afloat allows the July decision of the Eurasian economic Commission about the opening of the company wheeled market, allowing Interpipe has already signed agreements with BelAZ and Kazakh Railways. However, as many experts note, the Eurasian market may at any time be closed. Especially when the next anti-aggravation in Kiev.
For today it is already obvious that the crisis in mining and metallurgical complex will have negative consequences for the entire Ukrainian economy. According to various estimates, now in this sector and related sectors employs 350 thousand people. It MMC gave the country each year about 10 billion dollars of foreign exchange earnings. This means that the lack of this money will undermine the national currency. The data of Ukrainian state statistics already indicate an increasing number of unprofitable enterprises. If at the end of the first half of 2018, they were 24,7% of the total number of production sites of the country this year – almost 25%. Growing wage arrears, which already amounted to 3 billion hryvnias.
It should also be noted that, in addition to engineering and mining and metallurgical complex of Ukraine, the crisis became acute in light industry. In the last six months in this sector resigned 6 thousand people. And despite the fact that here only worked about 90 thousand! As a result, the drop in performance of 15%. Many businesses operate with a partial load, if not idle. But here the main feature of the crisis – the inability to compete with European labor market, where the shaft leave the Ukrainian workers. And it is also the consequence of European integration!
By the way, in recent years many economic analysts began to report problems with the sale of products for export farmers, which, along with the metallurgists are the main supplier of foreign exchange. As you know, this year Ukraine received a record harvest of grain and oilseeds – about 92 million tons. But farmers are faced with the problem of shipping these volumes. Recent years the same “Ukrzaliznytsya” repeatedly disrupted supplies of metallurgical and agricultural products. And given the clearly marked great land carve-up, it is possible that the railroad can play into the hands of foreign companies, disrupting grain exports.
Against the background of existing and upcoming economic issues libertarian government A. Goncharuk their actions and legislative initiatives, in fact, stimulates the development of the crisis in their own country. In fact, different footage Soros to work and will not. The phrase of the Prime Minister of the impending investment in Ukraine, implying draconian loan programs of the IMF, WB and other international financial octopus, was a Freudian slip.
Long-known scheme of operation of such institutions: loans under certain strict conditions among which one of the most important when it comes to any production project is the purchase of equipment and technology of the country of the borrower. Land initiative V. Zelensky, along with the policy of strengthening the national currency due to the pyramid of government bonds is fully consistent with the interests of foreign capital. In this context, the strengthening of the hryvnia is not more than a stimulation of import to Ukraine due to the draconian loan programs. Suffer from this policy, primarily exporters, who are experiencing hard times.
For today it is already clear that no government support programs, or at least the strategy of development of Ukrainian industry, as other industries of the real sector, the government of A. Goncharuk has not. In fact, the logic of libertarianism does not oblige them to have. But the problem is that this “philosophy” is commonplace cover lobbying of interests of foreign capital in Ukraine.
When it comes to tightening the rules of doing business for entrepreneurs, here the libertarians immediately disguise themselves in the clothes of the defenders of the public interest. Similar situation with the rules for obtaining grants and total control expense of ordinary Ukrainians.
For example, the same industry instead of supporting the team ze offers to dramatically increase rental rates for the extraction of ore in the Ukraine. A killer for the economy is the initiative of the LLC “Operator GTS of Ukraine” (subsidiary company “Ukrtransgaz”) to raise tariffs for transportation of gas four times. According to “Ukrmetallurgprom”, this increase will cost the mining companies is 3 billion UAH of additional payments, and for chemists that use gas as raw material, the increase in tariffs will lead to immediate plant shutdown.
Has the Ukrainian economy is also held in the spring of the electricity industry reform (the introduction of the notorious market), which in fact has only led to higher electricity prices. Today the daily electricity prices (2048 UAH per MWh) in Ukraine is higher than the rates in Eastern Europe – Slovakia, Czech Republic and Poland. Naturally, this leads to higher prices of Ukrainian goods. But the introduction of the electricity market – a direct requirement of the EU. And no one not going to cancel.
All of this naturally will lead to further outflow of capital and labour from the Ukraine, the degradation of the economy and society. Perhaps this is the main historical mission team see the quintessence of their libertarian politics, the fruits of which are just starting to ripen.