Euro banknotes are displayed next to an European Union flag, in Lille, on March 22, 2019. Amid the global economic consequences of coronavirus, Ukraine should seize the initiative and compete with Chinese manufacturers, according to Hennadiy Chyzhykov, president of the Ukrainian Chamber of Commerce and Industry (UCCI).
Amid the global economic consequences of coronavirus, Ukraine should seize the initiative and compete with Chinese manufacturers, according to Hennadiy Chyzhykov, president of the Ukrainian Chamber of Commerce and Industry (UCCI).
Ukrainian enterprises need to bid for deals with European Union clients to produce components, key parts and semi-finished products, he said, adding that they are better placed for this than Chinese suppliers.
The downturn in Chinese production has caused the world’s petroleum prices to drop sharply, benefiting Ukraine in the short term. However, China’s economic halt may hurt Ukraine’s exports too.
China was Ukraine’s main export market in 2019, and the dire fall in production is being felt on the Ukrainian economy, which has to find other reliable partners.
The EU’s 27-member single market became Ukraine’s main trading partner back in 2014, and the crisis might be an opportunity to expand on that trend.
Chyzhykov said Ukraine firms should be looking for more contracts with EU companies. He made the remarks at a business forum held in Lviv on March 13, as reported by Interfax-Ukraine.
“The spread of coronavirus can cause large-scale changes in the distribution of production and the creation of new production chains… Ukrainian enterprises should also compete for contracts from European companies,” he reportedly said.
He said some firms in European countries were already considering the possibility of partially or fully transferring orders for components from China to countries such as asTurkey, Slovakia, Poland, and Romania.
According to him, Ukraine should seize the chance and do the same, and develop tighter supply lines. Chyzhykov added that new production chains would be in place at the end of 2020, based on European standards.
“Many Ukrainian manufacturers have already switched to the European standards of the industrial products”, he said.
An updated Ukraine-EU Association agreement is due to be signed in 2021.
However, with the world economy slowing down and lurching towards recession, Ukraine’s economy will face additional pressure from expensive foreign lending and decreasing exports.
To make matters worse, Ukraine has a new government that has been on the job for just 10 days. There is low confidence that it is prepared to take on the crisis.
This has undermined the confidence of foreign investors, risking an outflow of portfolio investment, weakening the hryvnia, increasing borrowing costs, and hence reducing investment, growth and jobs.
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