Companies stop investing and noticeable pressures on the currency

The drums of war with Russia hit the Ukrainian economy

The Ukrainian hryvnia has fallen 4% against the dollar since the beginning of the year.

AFP

Despite US warnings of an imminent Russian invasion of Ukraine, there are few signs of panic in Ukraine. Stores are brimming with goods, banks are operating normally, and there is no pressure to buy airline tickets abroad, but the psychological stress of a potential war is already hurting the economy. Ukrainian, which was already dealt a severe blow when Russia seized Crimea and Donbass regions in 2014.

Currency and projects

The Ukrainian hryvnia has fallen by 4% against the dollar since the beginning of the year, making it one of the worst performing currencies in the world, along with the Russian ruble.

Even with the central bank supporting the currency with an injection of more than one billion dollars, a number of investors froze project financing and suspended expansion plans, and foreign managers in some companies left the country, taking into account the warnings of Washington and other Western capitals.

hit the economy

The Wall Street Journal quoted Ukrainian President Volodymyr Zelensky as saying that "Western signals of war with Russia mean panic in the markets and the financial sector."

"We can't handle this alone," he added.

Ukrainian officials have said that destabilizing the Ukrainian economy by igniting internal unrest could achieve Russia's goals in the country without the need for a single Russian soldier to cross the border.

In turn, the adviser to the Ukrainian president and former Minister of Economy and Trade, Timofey Milovanov, revealed that one of Russia's goals in mobilizing its forces on the border is to strike the Ukrainian economy.

deep recession

The Ukrainian economy entered a deep recession, and the currency lost about 70% of its value as a result of the conflict with Russia in 2014. Many Ukrainian companies suddenly stopped contacting their counterparts in Russia, and direct flights between the two countries were suspended.

In 2019, Zelensky came to power on promises to stamp out corruption and stimulate economic growth, which he has. The Ukrainian economy has since rebounded, and the country has made great strides away from Russia and has worked to develop trade with the European Union and China.

Ukrainian exports

Although in 2013 Russia received about a quarter of Ukrainian exports of goods, Russia's share of Ukraine's exports fell in 2020 to 5.5%, while the share of the European Union jumped from 26% to 38%, according to data from the Ukrainian National Statistical Office.

Corporate Plans

According to a survey by the European Business Association of 136 companies operating in Ukraine, 45 percent of those companies plan to continue business as usual in the event of a Russian military attack.

And 17% of these companies said that they are considering moving to western regions that are less likely to be occupied by Russia, and 10% of them are considering leaving the country.

waiting and waiting

The US investor in Ukraine and president of ARU Management Services, Del Perry, said his company, which has an energy business in Kiev, was looking to invest in a few renewable energy projects, but is now in a wait-and-see mode.

Amid the drums of war, Western citizens left Ukraine as well, but despite the US embassy in Ukraine calling on its citizens to leave the country amid the threat of a Russian invasion, the chairman of the board of directors of a company operating in Ukraine, in a letter to 850 of his employees, said: “I am an American. .But I will stay in Ukraine.”

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