Viktor Medvedchuk: De-integration with Russia and CIS countries has led to structural degradation and decrease in Ukrainian exports
Since 2005, the Ukrainian leadership has taken a number of steps aimed at a serious deterioration in trade and economic relations with partner countries, laying the institutional basis for a long-term economic crisis in the country. Ukraine’s accession to the WTO, the signing of the Association Agreement on the creation of a deep and comprehensive free trade zone with the EU, Ukraine’s withdrawal from a number of agreements within the CIS – all this has led to colossal export losses and de-industrialization of the country.
The fact that the short-sightedness in the choice of Ukrainian economic integration vector has ultimately caused the collapse of the economy is illustrated by indicators of significant reduction in the volumes of exported goods. According to the State Statistics Service, the exports of goods of Ukraine for 6 years decreased by 21% - from USD 63.3 billion (in 2013) to USD 50.0 billion (in 2019). The trade balance of Ukraine at the end of 2019 amounted to unthinkable USD 9.85 billion. By the end of this year, the situation will only worsen.
In 2020, the structure of Ukrainian exports of goods continued to systematically deteriorate, increasingly turning into agricultural and raw-material one. According to the State Statistics Service, in January-September 2020, Ukrainian exports of goods amounted to USD 35,017.8 million, while it decreased by 5.6% compared to the same period in 2019. A significant negative factor in the deformation of the structure of Ukrainian exports was the further reduction in exports of engineering products – by 2.9%. As a result, the share of engineering products in the total volume of Ukrainian exports decreased to 9.1%.
The export opportunities of the Ukrainian light industry have noticeably decreased. The volumes of export supplies of textiles and related products decreased by 10.1%, and footwear – by 15.2%. Significant export losses are being observed in other industries. For example, the production of polymer materials and related products reduced exports by 7%.
Amidst the decrease in exports of Ukrainian industrial goods, the exports of agricultural products, mainly raw materials, strengthened its position. Grain exports remained nearly at the level of last year – 98.9%. At the same time, exports of fats and oils has grown significantly – by 20.4% compared to 2019. Exports of finished food products, on the contrary, decreased slightly – by 0.1%.
In total, the share of exports of agricultural products and food products in the total volume of Ukrainian merchandise exports in the first 9 months of 2020 reached 44.2%. In addition, according to the preliminary results of October-November this year, it is already known that this figure will grow further.
Is that good that the exports of Ukrainian agricultural products is growing? Well, it does. That is bad that the exports of Ukrainian finished food products is being reduced alongside. Even worse, the volume of industrial exports and their share in the total volume of Ukrainian exports are decreasing, and significantly.
At the same time, the State Statistics Service of Ukraine reports that in January-October 2020, the agricultural production index compared to January-October 2019 amounted to 85.8%. There is no government reaction to the problems of agriculture in Ukraine this year, at all. The Cabinet of Ministers continues to quietly ‘function’ as if nothing had happened. No single special government meeting was held to work out ways to overcome the crisis in Ukraine’s agriculture.
Over the past 7 years, Ukraine has finally turned into an agrarian and raw-material appendage for other countries. Do such negative trends bother the government? Unfortunately, no. It refers similarly to Ze-MPs in the Verkhovna Rada, who behind the scenes make concessions to individual agricultural holdings, reducing the VAT rate from 20% to 14%, simultaneously stimulating raw agricultural production and killing the processing industry. It is obvious that Ukraine needs another parliament and government to change, among other things, negative trends in exports of domestic products.
Finally, in January-September 2020, Ukrainian exports of goods to the EU countries fell by 16.3%, but the current ‘European integration’ government is not even worried about this. At least it does nothing to change the situation. Criminal inaction has already become the hallmark of Shmyhal’s Cabinet of Ministers. It is obvious that until this government of ignoramuses is replaced by a government of professionals, the country’s vital problems will not be solved.
Chair of the Political Council of the OPPOSITION PLATFORM – FOR LIFE party