________________________________________________________________________________________________ ISSN: 2247-6172 ISSN-L: 2247-6172
Review of Applied Socio- Economic Research ( Issue 2/ 2011 ), Page | 197 URL: http://www.reaser.eu e-mail: editors@reaser.eu
June’s inflation reading feel generally in line with the estimates (+0.3% month-over-month, +11.8% yearover-year) and Bloomberg consensus (+0.5% month-over-month, +11.9% year-over-year). Food price growth expectedly decelerated in month-over-month terms in June (to +0.3% from +0.8% in May) on seasonally higher supply of agricultural products. [6] But the pace of deceleration was slower than last year, reflecting higher fuel costs and buoyant domestic consumption demand. This pushed year-over-year inflation last month to a 17-month high. The slowdown in producer prices was largely a result of weaker global steel prices. Watched by the IMF, Ukraine improved its fiscal position last year and entered 2011 with one of the most conservative budgets in the country’s history. As speedy economic recovery boosted revenue growth far above the initial target, full-year central budget revenues and spending targets were raised by UAH 14bn (to UAH 299bn, +16% year-over-year) and UAH 11bn (to UAH 334bn, +12% year-over-year) respectively, thus narrowing the central budget deficit target by 0.3pp to 2.7% of GDP (UAH 35bn). [5] The revised central budget deficit target (2.7% of GDP) seems consistent with the initial IMF requirement to keep the combined deficit of the general government (i.e. the central budget, local budgets and the Pension Fund) and oil and gas monopoly Naftogaz Ukrainy below 3.5% of GDP. The 2012 budget blueprint targets a central budget deficit of 2.5% of GDP, below this year’s limit and in line with IMF conditions.
Conclusion As a conclusion, I would like to mention that there are several factors and risks, connected with the foreign investments in Ukraine. But according to the United Nations trade and development body annual report on global foreign direct investment, Ukraine is the leader among the Commonwealth of Independent States in the foreign direct investment growth. Foreign direct investment flow into Ukrainian economy increased by 35% up to USD 6,5 bln in 2010, making Ukraine one of the leading investment recipients in the CIS region. Recently, the global rating agency Fitch Ratings raised Ukraine's long-term foreign credit rating from stable to positive. The significantly smaller budget deficit this year has been stated as one of the reasons for the revision of Ukraine's rating. Also, the economic recovery and spending restraint along with parliamentary approval of an unpopular pension reform contributed to Fitch's decision to mark Ukraine's economic advances. Notably, according to the World Investment Report 2011 [7], the Ukrainian FDI flow constitutes 23% of gross fixed capital formation. At the same time, the average rate for the CIS is 15,1% and for the world - 9,1%.
References [1] Dragon Capital website http://www.dragon-capital.com/en/ [2]OECD Benchmark Definition of Foreign Direct Investment, 4th edition http://www.oecd.org/document/33/0,3746,en_2649_33763_33742497_1_1_1_1,00.html [3] OECD “FDI IN FIGURES”, July 2011 http://www.oecd.org/dataoecd/60/43/48462282.pdf [4] OECD Investment news, June 2010, Issue 13 http://www.oecd.org/dataoecd/32/37/45562632.pdf [5] State Statistics Committee of Ukraine website http://www.ukrstat.gov.ua [6] The World Bank website http://www.worldbank.org/ [7] UNCTAD World Investment Report 2011, 26 July 2011 http://www.unctad.org/Templates/WebFlyer.asp?intItemID=6018&lang=1
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