Investment in Ukraine’s fixed assets slump 23% yoy in 1Q14

Макроэкономика 27.05.2014 Investment in Ukraine’s fixed assets slumped 23.1% yoy in the first quarter, compared to 8.6% yoy in the prior quarter, the State Statistics Committee of Ukraine reported on May 26. The decline was led by shrinking investment in industry, or a 34.7% yoy drop. Remarkably, investment in metal production increased 10.1% yoy while the main industrial decliners were investment in utilities (-56.9% yoy), food production (-21.9% yoy) and mining (-21.4% yoy). Alexander Paraschiy: In light of the political turmoil and military action, it’s no surprise to see a two-digit decline in investment in 1Q14, which we expect will continue for at least another quarter. The war in the Donetsk and Luhansk oblasts doesn’t offer any grounds for optimism. Still, we see potential for a fast recovery as soon as the political situation stabilizes. In particular, we see positive prospects not only for private investment but also for government investment to recover. The Cabinet has already signed an agreement on USD 1.5 bln in financial support from the World Bank, which includes nearly USD 732 mln for investment in energy efficiency and infrastructure.