Investment inflow decreased to $3.7 billion

The influx of foreign investment into the country accelerated in the third quarter, although in general over the nine months, non-resident investments in the country decreased by 14% - to $3.72 billion. However, due to the sale of banks by non-residents, the State Statistics Service simultaneously records an increase in the outflow of investment. There is no reason to expect an acceleration in the influx of investments in 2014, experts are sure.

Investors are reducing investments in the Ukrainian economy. In January-September, foreign direct investment (FDI) amounted to $3.72 billion, while for the same period last year it was $4.32 billion, the State Statistics Service reported yesterday. At the same time, the outflow of FDI has accelerated this year - up to $1.62 billion. As Kommersant was told in the State Statistics Service, a significant outflow is caused by the sale of assets by non-residents, mainly banks. In 2013, institutions with foreign capital such as Swedbank and Kreditprombank were sold. At the same time, banks were sold at a lower price than what was invested in them. And when calculating the outflow of investments, the nominal amount of investment loss is taken into account, and not the actual value of the assets sold.

The net inflow of FDI thus amounted to $2.1 billion, in particular $1.25 billion occurred in the third quarter. Last year, everything was the other way around - in the first half of the year there was a significant influx of FDI, and in the third quarter it amounted to only $247.1 million. “It is still difficult to talk about the increase in investment inflow as the beginning of a new trend. The invested funds were forced, they are necessary for the current business development. Large investors are waiting for the completion of the stories with the signing of the association with the EU and negotiations with the IMF,” explained Alexander Pecheritsyn, leading economist of the Financial Markets block of Credit Agricole Bank. “Next year will be the highest in terms of political risks in the last decade. In such a situation, large investors prefer to wait until after the presidential elections, and therefore there is a high probability that by the end of 2014 the influx of investments will continue to decline,” predicts Vitaly, head of the analytical department of SP Advisors Vavrischuk.

According to the State Statistics Service, of the total net FDI inflow for the nine months of 2013, almost half - $964 million - came from Cyprus (of which $783.5 million came in the third quarter). Thus, the share of Cypriot capital in the FDI structure has already reached a third - 33.1%. This year, a significant part of Cypriot investments was directed into professional and scientific activities ($230.8 million). This amount of funds even exceeded investments in the financial sector ($154.1 million) and industry ($76.8 million). The second largest investor in Ukraine was the British Virgin Islands ($444.8 million), mainly in the trade sector.

Against this background, investment from the EU has been modest. Most of all came from the Netherlands ($316 million). Large investments - $175 million - came from the UK, where the headquarters of the European Bank for Reconstruction and Development (EBRD) is located. Germany invested only $74 million, Russia - $49 million. Investors from Austria withdrew funds (-$186 million).

The current level of FDI inflows does not allow us to expect an acceleration of the economy in the coming years. The EBRD believes that low investment inflows and high unemployment are key threats to the Ukrainian economy ( see Kommersant, November 12 ). “The economy is being deprived of opportunities for development, and this will become a long-term problem. High rates of GDP growth should not be expected either in 2014 or 2015,” sums up Vitaly Vavrishchuk.

Yuri Panchenko

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