Government version
January 21, the cabinet presented its economic forecast for the year 2003. Liudmyla Musina, deputy state secretary at the Ministry of Economy, informed that the trade sphere remains the leader of economic growth. Last year’s level of trade increased by 9.6% and this year is expected to show a 10% increase. This information serves as a good indicator for bankers and other heavy investors making plans for this year.
The ministry’s ratings show that industries come next in terms of investment attractiveness. All told, plants and factories will enjoy 4% planned growth. According to Liudmyla Musina, the cabinet has no priority industries in 2003. There are no privileges for any “especially important” projects. She noted, however, that machine-building will retain a large part of government support, because raising production here is linked to the effective performance of various raw materials components. Last year, oil refineries and woodworking projects were industrial growth leaders.
The cabinet expects growth of 3.5% in the agrarian sector. Though less than last year’s, it is considerably better than predicted by the farmers. A degree of optimism is inspired by anticipated foreign investments. Last year, Ukraine was placed third as a world grain exporter. This made a number of transnational companies immediately interested. Borys Tymonkin, chairman of the board of Ukrsotsbank, informed that several foreign investors were discussing the possibility of purchasing some dozen Ukrainian elevators and constructing ports to help grain exportation. The agrarian market may well become a favorite with bankers when deciding on loans.
The cabinet believes that growth will also resume in the construction sector. Liudmyla Musina admitted that everybody at the ministry is well aware of the shadow transactions there. Last year, the declared output level was the same as in 2001, although outwardly there was every sign of a construction boom starting. “We hope that construction will walk out of the shadow this year,” Ms. Musina said. The government is almost as optimistic about transport (1.5% anticipated growth).
All told, the cabinet expects the Ukrainian economy to grow by 4% in 2003. Several prerequisites have already been formulated. The Ministry of Economy somehow believes that economic progress made in this country will stimulate the enactment of laws expanding the tax base. The document does not mention any tax reductions. Another factor causing an increase of 4% in GDP is the overall increase in the world economy (3.7%) and Ukraine’s key trade partners. This optimistic scenario will be played out if Russia shows 4.9% growth, EU 2.3%, and the US 2.6%.
Regrettably, the cabinet’s clearly formulated package of economic growth stimuli remains secret to the rest of the country. Perhaps lowering taxes will not be the cabinet’s principal guideline in 2003. The Ministry of Economy actually appears to be moving in the opposite direction. Also, it is anyone’s guess which tools the cabinet intends to use to upgrade the economic structure, raising the standards of living and state administration.
