Ukraine needs at the very least 5% annual GDP growth to catch up with neighboring countries in economic development. One option would be improved investment climate for higher FDI and domestic-sourced capital investment. Other options are limited given lack of fiscal space and aging capital assets.
Most economists and politicians agree that investment subsidies break market principles. However, many consider subsidies a necessary tool in the global competition for investors and as an economic growth booster. INESS analyzed the investment subsidies granted in Slovakia during the years 2002–2016.
If the needs of economy are long ignored, the ability to create resources necessary for maintaining or even improving our standards of living will be lost. The politicians – whether the ones in Slovakia, in foreign countries or in institutions of EU – should finally acknowledge several basic priorities vital for business.
The economic situation in Ukraine in 2015 and 2016 will depend on progress in externally supported reform program and on stabilization in the Eastern Ukraine. Fiscal consolidation, decline in real wages and unemployment will cause reduction of real private consumption. Weak hryvnia, despite dragging down consumption and investments, helps to increase fiscal revenues and narrow the current account deficit.
