Despite American warnings of the Russian possible invasion to Ukraine, there are few signs of panic in Ukraine. The shops are full of products, the banks are working as usual and there is no rush to buy plane tickets to leave the country. But the psychological pressure of the very existence of the possibility of an all-out war is already hurting Ukraine’s economy, which is one of the poorest in Eastern Europe and hit hard when Russia annexed the Crimean peninsula and the DNR region.
The value of the Ukrainian currency, the ribbons, has fallen by 4% against the dollar since the beginning of the year, making it one of the worst-performing currencies in the world alongside the Russian ruble. This, even while the Ukrainian central bank has spent more than a billion dollars to support the local currency. Many investors have frozen funding and delayed plans for expansion, and are currently waiting to see how this crisis will end. CEOs and other executives at several companies have left the country following warnings from the U.S. and other Western countries.
Signals from the West that there will be a war tomorrow … mean panic in the markets and panic in the financial field. Ukraine can not deal with it alone.
Western countries are rushing to send emergency aid to Ukraine, including $ 1.35 billion, pledged by the European Union last month. The undermining of the Ukrainian economy and perhaps the ignition of internal unrest could fulfill Russia’s goals in the country even without a single Russian soldier having to cross the border, Ukrainian officials say. One of Russia’s goals is to hurt Ukraine’s economy.
The economy entered a recession in 2014
Ukraine’s economy entered a deep recession and its currency lost about 70% of its value as a result of the 2014 conflict; Ukrainian companies have suddenly severed ties with veteran counterparts in Russia; Direct flights between the two countries have been suspended, And disagreements over Russia’s role in the war have driven a wedge between companies that have cooperated for years.
Since then the state has taken great strides. It has distanced itself from Russia, developed trade relations with the European Union as well as with the great rising force from the East, China, and Ukraine’s economy has managed to introduce rehabilitation.
According to a recent study by the European Business Association, which surveyed 136 companies operating in Ukraine, 45% plan to continue operating normally in the event of a Russian military invasion. About 17% said they were considering moving to areas of the country that Russia was less likely to occupy, and only 10% said they were considering leaving the country. “Old investment projects are still ongoing but new investments are being postponed,” Milovanov said.
Business ceased and investments were suspended
Dale Perry, a longtime American investor in Ukraine and head of ERU Management Services, which has an energy trading business in Kyiv, said his company was looking for investment channels in several renewable projects but now the company has entered a state of waiting to see what happens. “Business has stopped and all new investments have been suspended,” Perry said.
“Would I decide on a new investment these days? Obviously not,” he said. “It does not take an extraordinary business mind to make such a decision in the existing circumstances.”
People leaving Ukraine These departures include families of diplomats but also many others who listened to the call of the embassies to leave the country and uploaded posts to the network detailing the reasons that led to their decision to leave or even photos from the airport before boarding the plane. But not everyone follows these guidelines.
Last week, the day the U.S. embassy in Ukraine encouraged U.S. citizens to leave the country over fears of a Russian invasion, Petro Rondiak recorded a video in which he sought to reassure his colleagues at Winner, the second-largest car importer in Ukraine.