Domestic Investment Booms amid Scarce FDI: Agriculture and State Investment Drives Growth

UKRAINE - Report 22 Mar 2017 by Dmytro Boyarchuk

In 2016, investment in fixed assets began to recover quickly, growing +18.0% y/y through the year, with 2H 2016 especially strong. More specifically, investment in fixed assets increased 27.2% y/y in 3Q 2016 and 20.8% y/y in 4Q 2016. All this happened amid a meager FDI inflow of $3.3 billion in 2016.

Was this simply the result of a relatively low baseline—investment plunged 33.7% over 2013-2015—or was Ukraine really seeing a sustainable recovery?

Let’s look at the main contributors to recent trends. State policy in the energy, defense and transportation sectors, and soaring output in the farm sector stand behind this trend. Against this backdrop, the growth looks systemic, although there are some concerns about the effectiveness of state investments.

Now read on...

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