In January, the regular World Economic Forum annual meeting took place in Davos (Switzerland), where business leaders and politicians gather to size up the challenges facing the global economy, and which has brought unexpected advantageous for Ukraine.

Global background

Speaking in the world context, leading world experts agree that the global economic system has passed a turning point in its recovery. Representatives of EBRD told the conference that the risks for emerging economies of Europe continue falling against the major economies' recovery thanks to decisions taken by the European Union in the latest months. Thus, it enables to count on moderate growth of national and regional economies in 2013.

According to EBRD forecasts, GDP of countries of Central Europe and Baltic states will grow by 1.2% on average, of South-Eastern Europe - by 1.5%. Finally, economies of countries of Eastern Europe and Caucasus are bale to grow by 2.1%. According to European Bank for Reconstruction and Development (EBRD) chief economist Erik Berglof, Growth in Central and Eastern Europe hinges on developments in the euro zone and a slowdown in the CEE region is already underway. The countries in the region export heavily to the euro zone and investment, trade and remittances – money sent by workers abroad – depend on the single currency area's health, Berglof said in an interview at the World Economic Forum in Davos. One of the leading Chinese economists Li Daokiu believes that having extended its economy by 8-8.5%, China will become a driver of the world GDP growth in 2013.

As for main developing countries, Ernst & Young adds that this year their collective economy growth may reach the level of 5.4%, and in 2014 - 6.4%. And it will happen due to the growth of interregional trade, quantitative monetary and fiscal easing policy, as well as growing demand for raw materials. Ernst & Young’s Emerging Markets Center Leader Alexis Karklins-Marchay comments that "both businessmen and politicians can sigh with relief. The decline observed at fast developing markets in 2012 was temporary. The markets begin to recover. Moreover, they will play a decisive role in the recovery of planet's economy."  

The atmosphere of the forum showed signs of optimism and confidence. Analysts note that this forum has been the most optimistic since 2007. Nevertheless, IMF Managing Director Christine Lagarde asked the delegates not to "relax" as the global economy is in a "timid recovery" and leaders of the EU, US and Japan must continue the "policy of right decisions." According to Christine Lagarde, "we are standing in the antechamber of a new global economy, marked by rapidly shifting circumstances and new modes of thinking and driven more by the dynamic emerging markets and developing countries."

Ukrainian aspect

This year Davos Forum was successful also for Kyiv. The Ukrainian delegation successfully presented the governmental program of economy development, which points out top ten priority sectors, including aviation industry and IT technologies. Vice Premier Yuri Boiko reported that these sectors are able to give the biggest economic effect - growth of production, new jobs, increase of budget revenues. For this, Ukraine will continue improving investment climate and will create the State bank of development to finance the development of priority sectors. "Many European and Asian countries followed this path and achieved significant breakthrough in economy. Ukraine ahs chosen this path as well," Boiko said.

The problem of economy recovery was also discussed at the meeting between President of Ukraine Viktor Yanukovych and the founder of the World Economic Forum Klaus Schwab. In particular, the Head of State noted that competitiveness growth and creation of dynamic and flexible mechanism of meeting challenges would assist to gradual economy growth. 

Signing the agreement with Shell on a shale gas development on the Yuzivske field has become the biggest event of the forum. The production sharing agreement was signed by Ukrainian energy and coal industry minister Eduard Stavytsky and CEO of Royal Dutch Shell Peter Voser. The cooperation agreement worth $ 10 billion was signed for 50 years. In the first stage, the Shell company has undertaken investment commitments of $ 410 million to be spent on geological exploration. The state budget of Ukraine will receive "bonuses" worth $10 million, $25 million and $100 million. The investor is also obliged to finance social needs of regions of interest.

"It's advantageous, because these are investments. It's advantageous, because we will increase domestic gas production through these investments," Yanukovych said, adding that the agreement will help create new jobs and increase budget revenues. The President also noted that this agreement was a landmark event. "Now we have a shared responsibility, as we began a new case, and we will continue our relationship," he added.

Executive director of the Blazer Foundation Oleh Ustenko notes that joint enterprise with Shell can be considered as a signal to other big investors, proving that Kyiv can be trusted. The expert points out that with this agreement Ukraine will be able to diversify energy sources, to obtain energy independence from Russia, to reduce domestic trade deficit in long-term perspective and, most important, to increase direct foreign investments. It is not a secret that every country tries to draw attention to itself. "And signing the agreement in Davos was a successful marketing mix, which showed the global investment society the interest of one of the biggest companies to the emerging markets of Eastern Europe. It is one of the biggest investments, made in the regions for last several years," the analyst summed up.

We want to cite these words as example for chronic pessimists, whining year after year about how everything is bad. The key point is to do something to improve the situation, not to whine endlessly. Then the investments will come, the business climate will improve and the life will be better.

Andriy Boyarunets


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