From June, the European Union will terminate autonomous trade preferences previously granted to Ukraine. This decision will particularly affect agrarian exports, and Ukraine will return to trade conditions similar to those that existed until 2022. At the same time, the prioritized state support of the agrarian sector leaves our economy raw materials-based, which negatively affects Ukrainian exports, which lack products with high added value.
About it writes "Zerkalo Nedeli", reports Dengi.ua.
It is reported that according to data for 2024, the availability of trade preferences for Ukraine was accompanied by an increase in imports from the EU by 9%, while Ukrainian exports to Europe decreased by 5%. As a result, the negative trade balance with the EU amounted to almost 11 billion dollars, with total imports from the EU amounting to 35.6 billion dollars.
It is noted that although Ukraine is theoretically able to increase exports, it will not be enough without significant structural changes in the economy. Despite the fact that the country has not yet reached the level before a full-scale war, logistical problems have significantly decreased - the volume of sea transportation last year was almost equal to the indicators of 2018. Moreover, access to foreign markets is gradually expanding.
According to Taras Kachka, Ukraine's trade representative, opportunities to increase exports remain, but this is not enough without growth in domestic production. At the same time, given the current state of the trade balance, special emphasis should be placed on non-resource industries.
"No matter how much we would like to shift the responsibility for the current economic problems to someone else, the real reason for them is the lack of processing and technology, low productivity and raw material nature, which make the near-zero GDP growth the norm for us. These problems are much older than war and full-blown war, but they are stubbornly ignored by every new government, including the current one," the article says.
It also notes that the industrial strategy is still in its formative stages, and it remains unclear when it will be finalized - and whether it will be finalized at all. At the same time, the Ministry of Economy points to the existence of programs to support industrial development.
Indeed, there are government programs "Affordable loans 5-7-9%" and "Affordable financial leasing 5-7-9%", but a significant part of resources is directed to the agrarian sector: 46% of loans and 84.5% of leasing are in agriculture. In fact, enterprises outside the agrarian sector face limited opportunities to obtain financing.
Subsidies are also provided for various agricultural areas, from orchards and greenhouses to land reclamation systems, animal husbandry, seed production and grain storage. There is also one program to support agro-processing, offering up to UAH 8 million to purchase equipment, subject to co-financing. However, the scale of this assistance is very limited - such funds would be enough to install a small mill.
The Entrepreneurship Development Fund, which has not officially published reports since 2021, is currently engaged in the implementation of agrarian notes, a financial instrument to support agriculture.
Meanwhile, the Export Credit Agency insured export transactions of only 20 companies in the first quarter of this year for UAH 3 billion (about $73 million), which, despite the growth compared to last year, remains insignificant. The main clients here are also agro-producers.
"It is strange, the government for years declares the development of processing and technological production, but still comes out agro raw materials", - notes ZN.
Of all the tools that are not related to the agricultural sector and have the potential to stimulate industry, only industrial parks demonstrate real activity. Last year, 31 new spaces were registered, and the total number of such facilities exceeded a hundred. However, only about 30% of them are fully functioning, and only about ten parks can boast more than two residents. Bottom line: 12 businesses have already been built, and another 13 are under construction. Nevertheless, the transition from quantitative growth to qualitative change has not yet taken place.
Against the backdrop of a growing trade deficit and lack of sustainable economic growth, the country faces the threat of undermining its economic stability. It is no longer a question of barriers or restrictions in foreign markets - there is no possibility to reduce the volume of expensive imports in the coming years. Moreover, Ukraine needs to recover, compete for labor and ensure sustainable development. The only way out of the current situation may be a large-scale renewal of the industrial base and transition to new technological modes.
"Unfortunately, we are not talking about Industry 4.0 or 5.0 yet, we would like to break into 3.0 with at least half of the real sector. For this purpose, at least the state should stop supporting what is already doing quite well, and focus its limited resources on the development of really necessary technological industries. Otherwise, we will not have enough exports to make ends meet. Even if we sign an FTA with the whole world," the newspaper summarized.