Ukraine Business outlook 2015-19 Quarterly update

Transcript:Ukraine Business outlook 2015-19 Quarterly update:
Ukraine Business outlook 2015-19 Quarterly update – November 2015 by Dr Daniel Thorniley Content Executive summary Debt restructuring How senior executives see things Some assumptions Business outlook Human resources and salaries Bad blood? Where do you put Ukraine in your structure? Economic outlook Inflation and interest rate outlook Currency outlook Statistics Executive summary (1) Business is still very tough in Ukraine But there has been an upward surge in expectations in the market for hryvnia sales growth in 2016 compared with 2015 What is striking is that much of the positive shift has taken place in the last 2-3 months For example, those predicting double-digit growth 2 months ago numbered 16% and now this figure has risen to 31% while those bracketed in single digits have increased from 25% to 36% now. This may stem from recent economic stabilisation or the perception that the economic bottom has been hit and a slow recovery will now proceed. GDP growth is expected to turn positive around Q1-Q2 of next year At least two factors have provided some recent light: A 20% write-down and extended repayment terms remove some (only a bit) of the total debt load (and the implementation of the deal may prove tricky) The macro-economic numbers have started the slow process of stabilising and we can expect some month on month and quarter on quarter GDP growth in early 2016 Executive summary (2) We would also point out (and repeat) that very curiously, while fully 85-90% of companies are struggling badly in the Ukraine market, there is a “strange” scattered number of companies across sectors (pharmaceutical, consumer goods, engineering) who are selling very well in hryvnia and even in dollars and Euros (we examine why this may be so below) The recent debt agreement may also have improved the mood as well as the sense that the worst may also be over in eastern Ukraine. The 2016 budgets now appear much stronger than 6-7 weeks ago and much better than excepted 2015 results and this applies to a lot more companies But 2015 is going to be a tougher/worse year than 2014 because it will not have the relatively good/moderate start that 2014 experienced: in fact just the opposite as the first half of 2015 will be worse than the second half And we are seeing this now as the bottom seems to have been hit for a number of