Report outlines Ukraine's economic state (08/10/97)

Report outlines Ukraine's economic state

Eastern Economist

KYIV - The Statistics Ministry and the Ministry of the Economy have issued a preliminary report on Ukraine's economic state for the first half of 1997.

Although the gross domestic product (GDP) for January-June stood at 40 billion hrv, a drop of 7.5 percent from 1996, production grew in the fuel industry and metallurgy sector. The worst fall was in the food production industry, which contracted by 18.5 percent, followed by the construction materials industry, paper and pulp, engineering and the chemical and petro-chemical industry.

Total agricultural production dropped 15.5 percent, with the production of state farms down one-third, although private farm production rose by 3 percent.

Grain production is estimated at 37 million tonnes for 1997, while beet root and sunflower production are up from last year.

Ukraine's total foreign trade in the first half of 1997 is valued at $18 billion, a fall of 7 percent. Although trade with CIS and

Baltic countries dropped by almost one-fifth in 1997, this was compensated by growth in trade with other countries by 7.4 percent. The trade deficit was $849 million in the red at the end of June. Retail trade stood at 8.6 billion hrv, an increase of 15 percent.

The economy is currently experiencing a period of relative price stability. The currency markets have steadied and growth in food prices has markedly slowed. Food prices for 1997 grew by 7.2 percent and consumer goods prices by 1.6 percent. Last year's figures were 14.3 percent and 12.8 percent, respectively.

Results of the oil and gas industry's operations for the first half of 1997 paint a picture of over-optimistic forecasts. State oil, gas and oil refining companies generated 2.67 billion hrv worth of production in the first six months of 1997, according to government figures released on July 16.. This is a 5.5 percent increase, although the period saw only 16 oil and 12 gas wells commissioned. Yearly targets were set much higher - at 38 and 75 wells, respectively. UkrGazProm AT commissioned only 10 wells, or 16.1 percent of the yearly target, while UkrNafta AT - a paltry 15 wells, 34.1 percent of the yearly target. As of July 1, debts owed by Ukrainian consumers to gas-supplying companies were almost 5.4 billion hrv, a problem not likely to go away soon.

The Ministry of Energy agreed on July 16 to impose higher electricity rates in exchange for World Bank pledges to resume last year's financing program for fuel oil and natural gas supplies. Tariffs will increase for different areas of the economy by an average of 20 percent, but for residential consumers by up to 36 percent.

| Home Page |