Ukraine’s economy remains shaky – Its acting Prime Minister recently warned it was on the verge of bankruptcy. The European Union pledged to help by making it easier to do business with Kiev. CCTV’s Michal Bardavid takes a closer look.
Ukraine's Economy is on Verge of BankruptcyUkraine's economy remains shaky - Its acting Prime Minister recently warned it was on the verge of bankruptcy. The European Union pledged to help by making it easier to do business with Kiev. CCTV’s Michal Bardavid takes a closer look.
On March 21st leaders of the 28-bloc European Union signed the core chapters of the association agreement with Ukraine. These chapters mainly focus on political and economic cooperation. Other significant parts of the deal regarding free trade will be signed following Presidential elections set for May 25th.
The association agreement with the EU had been in the works for a long time but had fallen through in November of last year.
Ousted President Viktor Yanukovych’s decision to back out of the association agreement with the EU and sign a deal with Russia was one of the main reasons that sparked the months of protests here in Ukraine. However, many believe that Ukraine’s agreement could also benefit Russia.
Respectively, if we are removing trading barriers, we increase efficiency of the manufacturing and, as any textbook of microeconomics proves it, it will cause an increase in GDP. It is a really important and beneficial process for both Ukraine and the EU, which we believe will also be beneficial for the Russian federation as well.
The agreement has many advantages. One major benefit is related to custom duties. The removal of customs duties on many industries such as agricultural goods and textiles is expected to bring 500 million euros worth of trade benefits to Ukraine.
In total, we believe that our export to the EU should grow up for at least 2-3 billion Euros in agro-industrial fields in medium-term, five to ten years period.
Economic experts believe that though it will be challenging to enter the European Market – it will also have its’ upside.
The second benefit, which is from my point of view regarding the association agreement is the implementation of regulatory principles and standards and technical regulations which are currently in use in the European Union into Ukrainian framework. Ukraine will definitely need this to improve its’ investment climate.
Though it seems like signing of the agreement with the EU will strengthen Ukraine’s economy – it will be critical to observe whether or not Russia will take any retaliatory action. As most recently, Russia increased its natural gas prices by 80% – a blow into Ukraine’s already shattered economy.