Ukraine is a country which, by all indicators, had a chance to develop quite a sustainable economy
The presence of a serious resource base, agricultural potential – many countries do not even dream of such a foundation for building a national economy. However, Ukraine’s economic indicators leave much to be desired, or to be more precise, even such favourable “starting” conditions did not allow official Kiev to anchor its economy in a more or less stable field. Every year we observe a significant degradation in all sectors of the economy, even those that the Ukrainian government positions as the most developed and stable.
The state of the national economy is most clearly demonstrated by the indicators achieved in the last year, 2020. Last year the import of agricultural products to Ukraine increased by 13% and reached $6.5 billion. In the commodity structure of imports there was an increase of purchases in all categories. Livestock products were imported for a total of $1.3 billion (+17%); crop products – nearly $2 billion (+11%); fats and vegetable oils – $280 million (+11%); and finished products – nearly $3 billion (+13%). These figures demonstrate, first of all, that the agrarian sector, on which the Ukrainian government is counting so much, is in a deplorable state and cannot meet even the needs of the Ukrainian population.
To understand the scale of this “agrarian catastrophe,” take into account that Ukraine, officially regarded as one of the world’s top three potato producing countries, is one of the biggest potato importers because of a domestic shortage of potatoes, while buying them from Russia. Yes, yes, potatoes are imported from the territory of the “aggressor state”.
The livestock sector is not in the best situation either. According to the State Statistics Service as of 1 January 2021 the number of cattle in the country decreased in all types of farms. There are almost 2.9 million cattle in Ukraine, which is 192 thousand or 6.2% less than it was at the beginning of January 2020. The number of goats and sheep also decreased. There are now 1.144 million sheep and goats on all types of farms, which is 5% less than a year earlier. Something similar is also happening with the number of poultry.
Such negative trends have already resulted in sunflower oil and sugar prices in the country rising by 80% and 70% respectively compared to 2020. Fish, meat and dairy products have increased in price by 5 to 20%. Against the background of falling purchasing power and total impoverishment of the population it is a real catastrophe.
The strong sectors of the Ukrainian economy, which reached their peak during the Soviet times, are also plummeting. Machine building, rocket and missile engineering, shipbuilding, aviation, energy, metallurgy – each of these sectors of the national economy, if not completely destroyed, is in a near death state.
Having lost Russian markets and failed to enter European ones, the Ukrainian economy today is more and more oriented towards raw materials, and there is no chance for the situation to change in the near future.
What is the reason for such destructive metamorphosis, which has brought the once not thriving but nevertheless rather stable economy to the edge of the deepest abyss? Why does Ukraine, despite its large industrial and agricultural potential, as well as a favourable geopolitical location, continue to degrade?
All economic problems are usually a projection of political ones. Bad leadership, which includes both Poroshenko and Zelensky, has plunged the country into not only a political and social, but also a deep economic crisis.
The regular change of political elites, which has become a national tradition – in fact, the replacement of one temporary leader by another – prevents the formation of a more or less stable course that could stabilise the national economy. Ukraine is falling into an abyss, and even foreign subsidies and loans will not change the situation, but will only postpone the moment that will mark the complete collapse of Ukraine as a state.
In fact, at a time when Ukraine needs to start saving its economy and invest in a number of once very stable industries, official Kiev is begging the West for new loans and nodding at Russia, pointing at real and imaginary problems of the Russian economy.
Alexey Zotiev, Analytical Service of Donbass