Ukraine

After Russia, Ukraine is the largest country in Europe. It shares its borders with Russia, Belarus, Poland, Slovakia, Hungary, Romania and Moldova. The population stands at around 50 million.

Ukraine is an important emerging market at the crossroads of Central Europe, Russia, Central Asia, and the Middle East. There are currently around 250 US companies operating in the country as investors, exporters, importers, or members of the legal or consulting sectors. The most prominent industry sectors are the food industry, energy, building materials, consumer goods, informatics, health care, transportation, environmental technologies and tourism services.

compared to Georgia:  Ukraine is a much bigger country than Georgia… Its population is one-third of Russia’s. Also, Crimea is not technically a disputed area, like South Ossettia is in Georgia.

Investment Promotion Agency:

Odessa Regional Investment Promotion Bureau

4 Shevchenko Avenue

Odessa

65032

Ukraine

tel: +38 (0) 482 280 233

fax: +38 (0) 482 280 203

Odessa

Odessa is situated in the extreme south-west of Ukraine and borders the countries of Moldova and Romania. With a population of 52 million, Ukraine is the second largest market in the Former Soviet Union and Odessa is the gateway to that market. With its international airport, good road network and rail system, Odessa has near perfect communications with not only the rest of the Ukraine but also the rest of the Former Soviet Union.

The main industries in the region are mechanical engineering, metal-working, chemical, oil-refining, food-processing and textiles. Machine-building is a particularly prominent industry with specialization in sub-sectors such as diamond-grinding and laser treatment.

Investment Promotion Agency:

Odessa Regional Investment Promotion Bureau

4 Shevchenko Avenue

Odessa

65032

Ukraine

tel: +38 (0) 482 280 233

fax: +38 (0) 482 280 203

Lugansk

Lugansk has been identified as a priority development site within Ukraine. A former mining area, Lugansk is now concentrating on attracting investors to provide employment for those who have been affected by the closure of the mines. The benefits of locating in the trade zone include tax, customs and other financial incentives.

Particular sector strengths in the area are agriculture, light industry, metallurgy, chemicals and engineering. The education system is a strong one and graduating students are well qualified in traditional skills such as mechanical engineering and also in the increasingly popular computer sciences. The region produces around 6000 university graduates per year of which over half are qualified in technical subjects.

Macroeconomic Profile 2008

Ukraine looks worst of all. Its inflation has just reached 31 percent a year, although its state finances are in excellent shape and its growth rate stays at 7 percent. Ukraine's outsized inflation is caused by its central bank, which, for some reason, insists on a dollar peg unlike all other countries in the region. Since the dollar has fallen 13 percent in relation to the euro in a year, Ukraine has imported about that much inflation. Furthermore, its central bank maintains a refinance rate of only 16 percent, which means a negative real interest rate of 15 percent, an extremely expansionary monetary policy.  Consequently, Ukraine's money supply has ballooned by 56 percent in the last year, as foreign banks lend their subsidiaries in Ukraine excessive amounts, because they can finance their credits at about 5 percent a year abroad and lend in Ukrainian hryvna for 40 percent a year. This folly must end. The obvious solution is to let the exchange rate of the hryvna float freely to impede both the importation of inflation and speculative currency inflows.