The elections in Ukraine 26 of October will, among other things, also be a starting point, after which the next round of the collapse of the Ukrainian economy, postponed by non-economic methods, will become embodied in an explicit form.
Let me remind you that on September 22, the Ukrainian hryvnia, devalued by 7% over the week, updated historical a record drop in the interbank market (up to 15,1 grams per dollar). It is noteworthy that this situation arose against the backdrop of draconian measures by the National Bank of Ukraine (NBU), which was trying by administrative methods to stop the rapid depreciation.
Subsequently, the course returned to the level of 12,95 gr. - but only due to the measures of the NBU, which practically paralyzed the normal functioning of the foreign exchange market. The National Bank does not have and will not have any resources to stabilize the exchange rate by market methods. Meanwhile, under the cover of artificial “currency calm” (trading volumes on the interbank market have almost halved due to the unwillingness of players to sell currencies at the current rate), pent-up demand is rapidly increasing - increasing three weeks to 1 billion dollars. This means an immediate and significant devaluation immediately. after the inevitable "inclusion" of market mechanisms.
With the huge import dependence of Ukraine, this means a new round of inflation and a decline in real incomes. Further, the banking system, artificially maintained afloat only by gigantic refinancing scales (in fact, only by the unrestricted operation of the printing press), will face significant challenges - only 5 from 15 of the largest Ukrainian banks have acceptable stability. Accordingly, the NBU should either continue the policy of increasing the money supply (which is fraught with another round of inflation, devaluation and causes objections of the IMF), or accept the fact that the banking crisis will become a reality.
The dive of the hryvnia, in fact, is an illustration of the rapid contraction of the Ukrainian economy, which began in June and sharply accelerated in the second half of the year.
Consider the situation in dynamics. The first half of 2014 was passed against the background of quite favorable conjuncture in foreign markets. It was particularly successful for metallurgy, which a year earlier provided 22,5% of Ukrainian exports. The dynamics of world steel prices on the London Metal Exchange looked like this. A year ago, in September 2013, the price per ton was about $ 200 (the minimum was reached in July - $ 101); in January 2014-th - about 300; in June - approached $ 400. Up to April, prices for grain and crop production as a whole corresponded to those of the previous year (meanwhile, agriculture accounted for 27% of Ukrainian exports last year). At the same time, for example, prices for coking coal declined - to $ 120 in the second quarter from $ 152 a year earlier - and iron ore. However, in this case we are talking about secondary positions.
In parallel, Ukraine received quite significant amounts of financial assistance. The key sponsor of the Ukrainian economy turned out to be Gazprom, which until June inclusively supplied Kiev with 11,5 billion cubic meters of gas worth $ 5,15 billion (based on the price of supplies for March-June at $ 384 per thousand cubic meters). 3,13 billion provided by the IMF, about 1 billion - the United States.
Nevertheless, in the first half of the year, GDP fell by 3%. At the same time, according to IMF forecasts, on the basis of which the assistance program was developed, the fall in GDP should have been 5% during the entire 2014 year. Meanwhile, it was only the beginning.
First, the development of the long-standing structural crisis of the Ukrainian economy continues. Secondly, as was initially clear, the Ukrainian economy, in principle, could not survive Yushchenko 2.0. - i.e. attempts of sharp reorientation from the Russian to the western markets. This already a priori meant the agony of Ukrainian engineering and "advanced" metallurgy.
Thirdly, the conjuncture on foreign markets in the second half of the year became more and more unfavorable. So, iron ore from the beginning of the year in the world market has fallen in price by 38%. Prices for grain and food products in general began to plummet under the pressure of record harvest data - thus, grain stocks reached their maximum values since 2004.
Steel prices continued to rise, reaching $ 455 - but in July and August, Kiev was too actively killing its own metallurgy. In other words, fourthly, by unleashing a war in the southeast, the “revolutionaries” accelerated the course of relatively slow processes to the speed of the car.
Having adopted the tactics of unlimited terror in the hope of a quick victory, Kiev tried to reproduce the Slavic scenario regarding the key centers of the Big Donbass - Lugansk and the giant Donetsk agglomeration. The stake (under the savage cries of the conscious public) was made on the scheme “destruction of infrastructure, blockade, prevention of aid — humanitarian catastrophe — capitulation of the demoralized population”. In another way, the APU cannot fight and, most importantly, do not want to.
However, the blitzkrieg broke. At the same time, Kiev destroyed the Donetsk economy at an increasing rate. By August, industrial production in the Donetsk region fell by 28,5%, and in Lugansk — by 56%, both due to the direct attacks of the Ukrainian Armed Forces and from the concomitant rupture of economic ties.
For example, Mariupol metallurgical plants Azovstal and them. Ilyich because of the lack of raw materials switched to a reduced mode of operation at the end of July. At the same time, the shelling of the Armed Forces of Ukraine put a fat cross on the prospects for the resumption of the Lisichansk refinery. 1 August DTEK (the largest coal mining and energy company in Ukraine, owned by Rinat Akhmetov) published a rather panicky message. “Currently, the largest mine in Ukraine is not working - DTEK" Mine Komsomolets Donbassa ". This is 4 million tonnes of coal per year, this is 8% annual coal mining in Ukraine. ” “The first and main reason is near Kirov, where the mine is located, fighting is underway. These are risks to people's lives. The second is the lack of rail cars. Let me remind you in the Donetsk region traffic collapse. The railway infrastructure is destroyed, the movement of trains is impossible, there are no empty cars, we cannot export coal. Third - explosives. This is a dangerous substance that is prohibited from being brought into the area. But it is necessary for penetration to ensure the production process. Those brigades using explosives have stopped their work. ”
In August, the Armed Forces of Ukraine continued the practice of unlimited destruction of infrastructure and strikes on squares. Donetsk and Lugansk agglomeration lost light and water, but it had its “costs”. Due to massive power outages, the flooding of mines began, some of them stopped working. Because of the shelling, work was stopped at four plants belonging to the SCM group (Enakievsky and Khartsyzsk coke-chemical plants, Enakievsky metallurgical and Khartsyzsk pipe). In other words, Kiev continued to intensively destroy the key export sector of its economy and the basis of its own energy.
On the same day (only one of the days of the ATO), the Nord plant in Donetsk, which produces household appliances, was also stopped (due to the blockade and the inability to deliver components).
At the same time, the consequences of the ATO were affected far beyond the Donbass. So, at the Zaporozhye automobile plant 25 suppliers in the Donetsk and 11 in Lugansk regions. As a result, the Armed Forces of Ukraine actively destroyed not only the industry of Donbass, but also the industry of loyal regions. Thus, due to interruptions with components in July, ZAZ was able to produce only 8 vehicles, and the production of buses stopped three months before that.
At the same time, the government helped the Ukrainian Armed Forces, and in the same Zaporozhye aluminum production, which is owned by Rusal, is also closed. Motorsich, in fact, is also doomed because of Poroshenko’s ban on any military-technical cooperation with Russia. This situation as well as possible sets off the crowd of Zaporozhye ultras, screaming Russophobic slogans on the streets of the city.
From the more exotic - before the start of the ATO, Donbass accounted for about 20% of air traffic. As a result, the start of hostilities sent the corresponding market into the knockout.
In other words, the destruction of the largest industrial region had a systemic impact on the Ukrainian economy, one way or another affecting almost all the industries - including those that are extremely far from the face of the Donetsk mines.
Let's return to the statistics. Coal production (which accounted for 47% of the energy balance of Ukraine) as early as June 2014 went down by 28,7% compared to June last year, machine building shrank by 23,8%, chemistry - by 22,2%, refining - by 15,9%, metallurgy - by 12,3 %
The July “victories” of the Armed Forces of Ukraine cost the economy an additional 14,8% of coal, 8,3% of coke and 1,6% of metallurgy. At the same time, it is obvious that the “moderate” nature of the last digit was an illusion, and the production of metallurgists would rather “mirror” the production of raw materials even in the optimistic case for Kiev. Machinery for the month decreased by 2,9%.
The results of August were even more catastrophic - the fall in industrial production relative to August 2013 was 21,4%. At the same time, the fall again was not limited to Donbas - the Ukrainian economy as a whole received a very sensitive rebound (including in Kiev - industrial production in the capital fell by 14%). At the moment, the results of the government’s struggle with its own economy at any cost look like this.
By September 1, only 24 from the 91 mines subordinate to the Department of Energy were operating normally. Coal production in September compared with the same month 2013-th declined by 60%, while the decline was not limited to the Donetsk basin - a decline was observed in the case of Krivoy Rog.
As a result, firstly, the shortage of coal for the production of electricity, according to the Ministry of Energy, was 30%. Coal stocks in September declined by 10% over the month, appearing to be 55,9% less than in September of 2013.
Kiev does not have a chance to “play back” the situation - the LPR and the DPR control a small part of the country, but a very large part of the Donets Basin (its commercially viable zone, where coal mining has an economic sense), which accounts for about Ukrainian 2 / 3. Transition to import from far-abroad countries in a short time is impossible neither technically (Ukrainian TPPs are designed to work on local coal), nor, apparently, financially — Ukraine does not even pay for coal from Poland; possible costs of importing the required 8 million tons of coal will be slightly less than $ 700 million.
As for other energy carriers, in fact Ukraine needs not 5, but 10 billion cubic meters of gas. At the same time, the results of Milan show that there will be no charity. This means that Kiev will have to spend $ 3,68 billion on imports and pay off a debt of $ 3,1 billion. Let me remind you that the gold reserves of Ukraine now amount to $ 16 billion, and by the end of the year it may receive from the IMF another 2,2 billion.
In other words, the country is in a resource crisis, and its consequences are already visible.
Electricity production fell by 12,1% with the prospect of further decline. Coke production - at 16%. Steel production in September increased by 2,7%, but in August it decreased by 37% compared to the same month of the previous year. Chemistry, according to the latest data for August, lost "only" 15,7%.
What will happen to the Ukrainian economy next? First, in general, it will be overtaken by a delayed effect from a fall in industrial production. Secondly, the fall of the industry, which the energy crisis is pushing into the abyss, will hardly stop at what has been achieved. So, after the start of the heating season, industrial consumers should reduce gas consumption by 30%, fertilizer producers (that is, a huge part of Ukrainian chemistry) should completely eliminate gas consumption. Coal crisis promises to be no less problematic.
The external conjuncture in the least affected sectors will remain unfavorable - for example, iron ore prices will decline further, and there are no reasons to revive the agricultural market either.
In other words, Ukraine, with the hands of Poroshenko, Yatsenyuk and Co., made a rather successful economic suicide attempt, having approached the Moldovan model by several steps at once, and the only question is whether it will bring the matter to the end. Strategically, this means that chaos on the south-eastern borders of Russia is a very long time. The tactical situation in the economy can generate a series of very unpleasant surprises for Kiev. So, although the authorities have learned to suppress well the grassroots protest of the “wrong” Ukrainians in the east, the fact is that after the loss of Donbas, the coexistence of a unitary state with a gigantic burden in the form of overconsuming Kiev and regions to the west is becoming less profitable.
In fact, the Ukrainian economy rested on two main regional hubs (the Donbass and the Dnepropetrovsk-Zaporozhye combination). Kharkov played a supporting role here. At the same time, the very same Kolomoisky (although not only to him) hardly seems an attractive prospect of turning his “feud” into a key sponsor of the rest of the “Square”. As a result, the actual disregard of official Kiev and the slogans of decentralization came into vogue at the very beginning of the crisis. Now the slogans of decentralization are actually becoming a general trend.
In other words, it is quite likely that the fragmentation of Ukraine in a relatively specious "wrapper" will continue and further - while the reaction of the population of Kiev, deprived of traditional privileges, may turn out to be peculiar.