The difficult and controversial 2020 is coming to an end. The network users are either laughing, or hoping that in 2021 everything will be fine at once, well, or at least it will be as it was before.
What is the coronavirus 2020 remembered for by business and what should really be expected from 2021, was figuring out.
Ambiguous results of 2020
As the economist of Ukraine Economic Outlook Hryhoriy Kukuruza commented to 's partner, the weekly Persha Shpalta, in 2020 the Ukrainian economy as a whole turned out to be quite adapted to the coronavirus. Excluding certain features that the pandemic has brought, the Ukrainian economy is growing.
«We finished 2019 with a GDP of $153.6 billion. 2020 after, of course, a difficult Q2, we end at about $147-148 billion. This is a slight decline for such a year. Moreover, the main decline came in 2020 Q2 when everyone was physically at home. So this is a classic decline, when someone lost their job.»
economist of Ukraine Economic Outlook
Hryhoriy Kukuruza added that after 2020 Q2, the Ukrainian economy moved to a rapid recovery: Q2 was at minus 11.2% of GDP, Q3—minus 3.5% of GDP. In 2020 Q4—the beginning 2021 Q1, this figure will be at minus 0.5-1.5% of GDP due to the lockdown that is planned in January, and the damage that certain industries may have.
However, according to Andriy Bychenko, Director at the Sociological Service of the Razumkov Center, 2020 was objectively one of the few when there is practically no industry that believed that things have improved.
"In all spheres in which we conducted the survey, negative assessments prevail. Perhaps it was not a surprise, but it left an unpleasant impression," he added.
At the same time, according to Pavel Sebastianovich, director of the private enterprise Compex Alloys, in 2020 the rating of Ukraine's investment attractiveness has dropped again, and for entrepreneurs the year has been terrible.
According to him, there are two ways of legislative initiatives: towards economic freedom and reducing the corrupt officials powers (tax officials, controllers—anyone). Even if taxes are not reducing, entrepreneurs feel that they can work. And in Ukraine, the opposite is true, as economic freedom is narrowing and more powers are given to corrupt officials.
«Today the tax officer can decide what your business goal is. Now Mr. Hetmantsev has given them such powers. That is, tax officials will come and ask: why are you doing what you are doing? How can it be? I don't know where in the world there is such a thing. And they will decide whether the business goal is consistent with his understanding of doing business or not ... Or this tax invoice blocking system that now exists. We have a total of 250,000 enterprises that pay value added tax in our country. Now 136,000 are blocked. Half of all enterprises in our country are blocked, they cannot work. And the tax authority is now reporting that they have fulfilled the VAT plan. Of course, if you have blocked half of the enterprises, that is, you have taken money from them, blocked them, enterprises cannot use them, they must pay this VAT again in order to continue working. That is, double payment of VAT».
entrepreneur, coordinator of the civil platform "Nova Kraina"
He added that President Volodymyr Zelensky called the Chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy Danylo Hetmantsev to simplify the tax system, reduce pressure and introduce a tax on withdrawn capital that has already been introduced by Latvia, Georgia, Estonia, Poland.
"Everyone around is introducing this tax because it attracts investments. And we are doing everything the other way around," Sebastianovich noted.
However, some industries have shown rapid growth. According to Vladyslav Savchenko, the founder of a grocery delivery startup Foodex24, despite the negativity due to the pandemic, the business had a sharp turn towards e-commerce.
"The volume of the e-commerce market began to grow very quickly. For example, the CIS countries began to grow by 200% per year, if we take the indicators of recent months," he said.
Optimistic hopes for 2021
According to Hryhoriy Kukuruza, next year will be either a year of cautious or confident optimism. There are forecasts for the hryvnia strengthening to 27 UAH per $ in the first half of 2021. However, real GDP is expected to grow at 6% after a 5% decline in 2020.
According to the Ukraine Economic Outlook, there is no reason for the hryvnia to be above 28.1—28.3 per dollar. According to forecasts, there will be a currency surplus in the foreign exchange market in January—February. This will help hryvnia return to the corridor of 27.7—28.2 hryvnia per dollar.
The National Bank of Ukraine (NBU) has kept its forecast for a decline in gross domestic product (GDP) for 2020 at 6% and improved expectations for the indicator growth in 2021 from 4% (in the July forecast) to 4.2%
"The main driver of GDP growth at the level of 4% in 2021—2022 will remain private consumption. Economic growth will be supported by fiscal stimuli, soft monetary policy and recovery in external demand," the NBU added.
According to the Minister of Economic Development, Trade and Agriculture Ihor Petrashko, the COVID-19 pandemic will most negatively affect the economy at the beginning of 2021, however, business support programs and soft loans will help mitigate this impact.
«We expect GDP growth of 4.6%. Many say that this is a high figure that has not been there for many years. But we believe that this can be achieved. The economy will return to a positive trend in the second half of 2021.»
Minister of Economic Development, Trade and Agriculture of Ukraine
Vladyslav Savchenko added that in 2021 he expects the world economy to recover. The most active industries will be medicine, delivery and e-commerсe projects.