Credit-Rating confirms the rating of Odesa at uaАА-, determines investment attractiveness at uaINV5 (the highest level) Credit-Rating confirms the rating of Odesa at uaАА-

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Expert Opinion

12.01.2011

Credit-Rating: Ukraine’s Economy in November and December 2010

Credit-Rating has today published its monthly survey of Ukraine’s economic development in November and December 2010. The survey features evaluation of real and financial sectors of economy, of external environment, state budget sector and government’s debt-related policy.

The pace of real sector of economy in November 2010 was generally positive, though growth rates in some fundamental sectors have decelerated weighed by retaining adverse environment for Ukrainian exporters in the global commodities markets and declined external demand for Ukraine-produced exported goods. The highest growth rates have been represented in January-November 2010 in processing industry and retailing of 13% and 6.8% respectively. A significant contribution to rising output of the processing sector has been made by machine-building, fueled by retaining of rather high external investment demand for the products of the national transport machine-building sector. Thereat, limited funding from the banking sector impedes recovery of the real sector of economy.

Despite of certain revival in the construction sector, which has been mainly fueled by state funding of construction works, specifically within preparation for Euro-2012, the sector has been very slowly overcoming consequences of the financial and economic crisis. Thus, despite of extremely low comparative base of 2009, the indicator of construction works performed in January-November 2010 has been recorded at 91.8%.

A traditional pre-New Year’s rise in consumer demand accompanied by increased real incomes of the public, had positive effect on output of the food industry and retailing sector. A trend of rising consumer demand retained in December 2010 as well.

The adoption of the Law ‘On the State Budget of Ukraine for 2011’ on December 23, 2010 will allow for timely arranging local budgets, and for providing funding to main state budget programs in first months of 2011. Despite the fact that key macroeconomic indicators, on which the planned budget parameters for 2011 have based, are rather realistic, Credit-Rating believes that hardships with execution of the revenue side of the state budget will persist due to decreasing rates of certain budget-forming taxes upon the Tax Code coming into effect. Thereat the decreased liquidity of the budget system in 2011 prompted by insufficient execution of the state budget revenues may impact timeliness of funding the revenue sides of the state and of local budgets in the current year.

Credit-Rating agency has operated in the Ukrainian market since 2001 being committed to assignment of the national scale ratings. The agency has assigned 1128 ratings. In November and December 2010 Credit-Rating assigned 12 ratings, revised 234 ratings, suspended 14 ratings, and withdrew 13 ratings. As of January 1, 2011 Credit-Rating maintains monitoring of 615 ratings, in fact 452 of corporate, 111 of financial and 52 of municipal sectors.

Information on all credit ratings assigned in accordance with the National Rating Scale may be found in THOMSON REUTERS and BLOOMBERG information systems.

For more information, please contact:
Department of Information and Communications 
Sergey Rozumyak +38044490 25 50 
SRozumyak@credit-rating.com.ua 
Denis Rudenko
DRudenko@credit-rating.ua

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