Here are some key indicators of Ukraines worsening situation: 1. The nations GDP is down almost 5% from a year ago and growth is expected to worsen. 2. Ukraines retail sales are falling at the rate we havent seen since the financial crisis. 3. And industrial production is collapsing. 4. The most immediate concern however is the nations currency, which has been trading near record lows in spite of currency controls. In fact Fridays fall in hryvnia was unprecedented (over 11%), as Kiev fails to stem capital outflows. 5. Inflation rate is running above 14% and will spike sharply from here in the next few months if the currency weakness persists. Real wages are collapsing. 6. Finally, Ukraines fiscal situation is unraveling. In its attempts to defend the currency, Kiev has been using up its foreign exchange reserves. It is only the access to some IMF funding that has allowed Ukraines government to maintain some semblance of order in its FX markets. Moreover, public debt levels continue to rise as the government attempts to keep the Ukrainian banking system afloat. Government debt (including guarantees such as NBU liabilities to the IMF) to GDP has quadrupled since 2008. A number of economists now believe that given worsening economic crisis, the countrys public debt problem is simply unsustainable and default is becoming increasingly likely. soberlook/2014/09/ukraine-on-brink.html
Posted on: Tue, 23 Sep 2014 21:34:56 +0000
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