Macroeconomics
Ukraine signed the free trade portion of its historic Association Agreement with the European Union on Jun 27 this year, following the signature of the political portion of the deal back in March immediately after the country’s EuroMaidan revolution had brought a new pro-EU government to power. We believe that a new level of cooperation between Ukraine and the EU will have a clearly positive effect on the country’s development in the long run, with any short-term costs of implementing Western-style standards to be outweighed by future benefits. The EU is already Ukraine’s largest trade partner, with the potential now existing for a substantial increase in bilateral trade turnover. According to the statistics for 1H14, Ukrainian exports to the EU rose by 15% YoY to USD 9.3bn. We believe that if the most important issue facing Ukraine today – the war in the Donbass region – can be resolved in the coming months, the nation’s economy will start to recover quickly. Our base-case scenario is
