BY
According to the Ukrainian State
Statistics Office, after 18 months of recession, an anemic but nonetheless
welcome return to growth has arrived. GDP in the quarter July – September
saw growth of 0.7%. The annual rate of economic decline slowing from 17.2%
in the 1st quarter to 7% in the 3rd.
Most annalists predicting an economic
growth rate of between 1 – 2.5% for 2016. Meager as that may appear,
better a sustainable 2% than an unsustainable larger figure.
The question therefore, is whether the 1
– 2.5% estimates (and all those in between) are in fact sustainable?
Whilst the war in eastern Ukraine
quietly simmers, with deaths counted in single figures each day rather than in
tens or hundreds when peak hostilities were in full flow, that will have had an
impact upon a return to growth. Small increases in domestic consumption,
exports and investment responsible.
One question of sustainability is
therefore whether continuing hostilities in the east of the nation can be kept
at a simmer rather than a return to boiling over.
Yet another question of growth
sustainability is that of investment in 2016, and that will in no uncertain
terms be dictated by the willingness of the Verkhovna Rada to start passing
more reform orientated, market opening legislation, together with visible and
tangible institutional efforts to implement anti-corruption legislation without
any (or at least much) political interference.
The sustained protection of property and
intellectual rights, the rule of law applied impartially, no matter who they
are or who they know, and a transparently enforced leveling of the playing
field will bring investment – whether or not the war in the east returns to
boiling point.
Those in the trenches facing off against
the Ukrainian armed forces in the east are problematic, but it is those that
are entrenched in the corrupt networks at all levels in and behind the
Verkhovna Rada are a far more destructive force.
One has to suspect the later is far more
of a threat to sustained economic growth in 2016.
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