Our comprehensive assessment of Ukraine's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Ukraine, as well as the latest industry developments that could impact Ukraine's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Ukraine before your competitors.

Country Risk

Ukraine Country Risk

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Core Views:

  • Economic recovery in Ukraine will be sluggish in the years ahead. The country is stepping out of a prolonged period of economic contraction, having experienced two fully-fledged economic crises in the last seven years.

  • It is unlikely that the Ukrainian government will retake control of Crimea and Sevastopol, nor the occupied parts of the Donetsk and Luhansk regions.

  • Ukraine will only meet part of the major structural reforms that are required by the IMF through its financing package. The Ukrainian authorities have already removed most of the gas subsidies and also implemented pension reforms. However, fighting endemic corruption, reforming the judiciary, and improving the banking sector and the business environment will take a slow pace.

  • Despite the new IMF package, Ukraine's FX...

Ukraine Operational Risk Coverage (9)

Ukraine Operational Risk

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BMI View: Ukraine's political crisis, which began in 2014, its deteriorating economic outlook and hostile relations with Russia are heightening logistics risk in the country. The BMI Logistics Risk score for Ukraine highlights this, but also takes in to account the entrenched challenges that go beyond the current crisis and which are likely to damage investor interest in the longer term. Ukraine scores 45.6 out of 100 in the BMI Logistics Risk Index (below the global average), ranking the country in 111th place out of 201...

Ukraine Crime & Security

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BMI View: Crime and security threats pose the greatest risk to investors seeking to break into Ukraine, or businesses already operating in the country - which remains on a war footing. Although a ceasefire is in place, instances of violence occur every day in eastern Ukraine, with state forces accusing pro-Russian separatist groups of breaking the agreement, and vice versa. In the rest of the country, cybercrime and exposure to organised crime remain a key threat. Overall, Ukraine scores a very uncompetitive 33.2 out of 100 for the Crime and Security Risk pillar of the BMI Operational Risk Index. This places the country in 29 th place out of 31 Emerging Europe states.

Risky Security Environment
Ukraine and Regional Average Crime and Security Risks

Ukraine Labour Market

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The evolution of the Ukrainian labour market has been a gradual one, moving from an agrarian state to an industrial one under the Soviets, before finally making steps towards a service-oriented economy. The structure of Ukraine's workforce provides an indication of how the economy is developing. Around 40% of the population have jobs in the service sector, another 40% work in industry and 20% work in agriculture and forestry.

The balance can be expected to shift towards the service sector over the long term as Ukraine shifts towards higher value added industrial outputs and greater growth in retail and financial services occurs. In the near term, there is a shortage of skilled technical managers and engineers, whereas the market for lawyers, economists and financial services specialists is well catered for.

Ukraine has an advantage with relatively low unit labour costs and a highly skilled and educated workforce (with a...

Ukraine Logistics

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The 2014 Ukrainian Crisis has increased the risk  level for companies operating in Ukraine and made the country less attractive to investors. The BMI Logistics Risk score for Ukraine highlights this, but also takes into account the entrenched challenges that go beyond the current crisis and damage investor interest in the longer term. Ukraine scores 45.5 out of 100 in the BMI Logistics Risk Index, below the global average, ranking the country in 99th place out of 170 states globally and 19th out of 30 emerging Europe states. The 2014 Ukraine Crisis has placed downward pressure on this score, but we note that a lack of diversity and an overreliance on Russia, across all pillars of the BMI Logistics Risk Index, increases the threat of operational risks and deters investment.

Ukraine's economy is inextricably linked to Russia, with its neighbour its...

Ukraine Trade & Investment

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Ukraine's investment environment remains hostile and unpredictable. The ousting of former President Viktor Yanukovych during the 2014 Ukrainian revolution, followed by the annexation of Crimea by Russia and increasingly violent secessionist activity in south-eastern Ukraine, has severely heighted political risks, and the country still possesses significant macroeconomic imbalances. We maintain that Ukraine will remain attractive only for the most risk-tolerant investors for the foreseeable future. Overall, Ukraine scores 44.4 in our Trade and Investment Risk Index, worse than Belarus (48.0) and Russia (48.7), ranking it 98th globally.

Some positive developments have occurred: the threat of renationalisation and stalled privatisations, which until recently loomed over the investment climate, seems to have receded, and property rights have become more secure. Issues of transparency, corruption and red tape are also being addressed, albeit...

Ukraine Industry Coverage (27)


Ukraine Agribusiness

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BMI View: We maintain a negative outlook for Ukraine's agricultural sector in 2016 owing to a range of concerns. All agricultural markets will be negatively affected by the poor macroeconomic fundamentals in Ukraine. There will be limited investment into the country over the coming quarters given the unstable political and economic situation, which will affect agricultural production over our forecast period. Russia's ban on imports from Ukraine will weigh on production for the dairy and livestock industries, as Russia represents one of Ukraine's largest agricultural export markets. Furthermore, significant currency depreciation will limit imports, hitting input use and domestic investment. However, Ukrainian farmers will fail to benefit from the export opportunities linked to this weaker currency due to export restrictions and...


Ukraine Autos

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BMI View: We are anticipating another challenging year for new vehicle sales in Ukraine in 2016, as domestic demand continues to be suppressed by the country's poor political and economic situation. We are targeting a 6.1% fall in sales across for the sector as a whole, with passenger cars set to outperform commercial vehicles.

Total Vehicle Sales By Segment

Key Views

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Commercial Banking

Ukraine Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Defence & Security

Ukraine Defence & Security

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BMI View: The Ukraine-Russia conflict has become somewhat frozen with skirmishes between Ukrainian forces and pro-Russian separatists flaring up every so often despite the ceasefire. Although Russia's attention has turned inwards and to de-escalation, we do not expect Ukraine to become complacent with its defence. As such, we forecast a continued uptick in defence spending throughout 2016 and over the medium term. We see President Poroshenko continuing to reform and invest in the country's out-of-date defence industry as well as develop greater international ties.

However, we caution that systemic corruption and oligarchy remain fully entrenched in Ukraine's political landscape creating an unfavourable operating environment for foreign investors. Furthermore, if Poroshenko wishes...

Food & Drink

Ukraine Food & Drink

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BMI View: We have a positive outlook on Ukraine's food and drink industry over our forecast period to 2019. Growth in the industry will be led by mass grocery retail sales as investment increases in the country's western region and Kiev following unfavourable business conditions in the eastern region. The country's high inflation levels as well as decreasing private consumption will hamper short-term industry growth. However, there is growth expected in the food industry as companies look to expand operations.

Headline Industry Data (local currency)

  • 2015 total food consumption sales growth: +35.2%; compound annual growth rate (CAGR)...

Freight Transport

Ukraine Freight Transport

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Following an extremely difficult 2015, it is hoped that Ukraine will see some improvement in 2016 although the conflict in the east will continue to hamper growth and affect trade with Russia. It is expected that trade will start to pick up in 2016 and with it, the freight industry. The agricultural sector will play a large role in stimulating the country's economy, though some dry weather conditions may affect harvests in 2016. Meanwhile, the IMF will continue to support Ukraine's economy, offering further lending in the light of its debt to Russia. Ukraine's relations with the EU will also help to encourage trade and put the country on the road to recovery. .

Real export volumes are forecast to increase by 5% in 2016, compared to a fall of 20% in 2015. We expect this growth to lose strength in 2017, falling to 1% but by 2020 it will have recovered to 6.9%. Imports will see a more stable future, rising by 11.4% in...


Ukraine Infrastructure

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BMI View: The outlook remains extremely poor for Ukraine's infrastructure sector. 2015 will see further falls in construction industry value which, barring a small increase in 2011, has been in decline since 2008. As well as ongoing security concerns related to the clashes with pro-Russia separatists in the East of the country and tensions with Russia over the annexation of the Crimea, the Ukraine's domestic economy is in a major recession and there is little potential for public or private investment in new infrastructure projects. We therefore do not expect to see a return to infrastructure industry growth until 2018 at the earliest and note Ukraine will not regain peak values seen in 2007 until well beyond the end of the current ten year forecast period.

Latest Updates And Structural Trends

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Ukraine Insurance

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BMI View: Multinationals are likely to continue to regard the Ukrainian market with some caution over the next few years. The country's political and economic environment remain fraught and have been detrimental to consumer confidence and hence demand for insurance products over the past few years. The country's difficulties have also resulted in depreciation of the Ukrainian hryvnia, which has led to a severe contraction in USD denominated premiums. That said, from a low base, sales are starting to grow again as the economy starts to thaw. Nevertheless, we believe the Ukrainian insurance sector holds definite long-term potential. Many segments, including the life and health insurance markets in particular, remain underdeveloped and penetration is low. Given the size of Ukraine's population, a steadier economic and political backdrop could present a window of opportunity for foreign investors as...

Medical Devices

Ukraine Medical Devices

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BMI Industry View: We expect the Ukrainian medical device market to grow by a CAGR of 0.9% over the 2014-2019 period, caused by negative import growth, poor economic performance resulting from the conflict in the eastern part of the country, and severe currency depreciation. Demand for expensive medical equipment is largely met by imports, although the domestic industry is gradually accounting for a larger share. Diagnostic imaging exports have increased by seven times ...


Ukraine Metals

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BMI View: We have increased our 2016 tin price forecast to USD16,500/tonne owing to a stabilisation in the Chinese economy over Q116 that has boosted all industrial metal prices significantly over January-April. While we expect consolidation over the remainder of 2016, tin prices will continue to recover beyond 2016 as the global market posts sustained market deficits and inventories dwindle.

Global - Tin Supply, Demand & Price Forecasts
2014 2015e 2016f ...

Ukraine Metals

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BMI view: We have revised our aluminium price forecast from USD1,575/tonne to USD1,600/tonne in 2016, as the tightening market provided an earlier than expected floor in Q116. Aluminium prices will gradually edge higher as the global market moves into a deficit by 2018.

Global - Aluminium Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Ukraine Metals

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BMI View: Despite the strong H116 iron ore price rally, prices will edge lower due to weakening Chinese consumption over the latter half of 2016. From 2017 onwards, iron ore prices will remain subdued as iron ore prices remain under pressure from an over-supplied seaborne market, driven by strong production growth in Australia and Brazil, and weak consumption growth in China.

Global - Iron Ore Production Forecasts
2013 2014 2015e 2016f

Ukraine Metals

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BMI View: Nickel prices will bottom in 2016 as weak production drags the global market into deficit. For instance, we expect Chinese imports of nickel to grow over the coming quarters. Prices will begin 2016 weaker than we had previously expected and we have thus revised down our 2016 average price forecast to USD9,000/tonne from USD10,500/tonne.

Global Nickel Forecasts
2013 2014 2015e

Ukraine Metals

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BMI View: We have revised down our average copper price forecast for 2016 to USD4,900/tonne. We expect prices to find a floor over the first half of 2016, and begin to stabilise thereafter, supported by production cuts and modest consumption growth.

Global - Copper Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f ...

Ukraine Metals

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BMI View: We have raised our gold price forecast for 2016 to USD1,275/oz and have a new five-year price target of USD1,400/oz. We have turned more positive towards prices due to rising inflation pressures and our view that real rates will remain depressed in developed markets beyond 2016. A modest rise in prices will be insufficient to reverse the trend of weak mine investment and industry consolidation.

BMI Gold Forecasts
2014 2015 2016f ...

Ukraine Metals

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BMI View: Global steel prices will remain subdued due to a persistent steel oversupply over the coming quarters. From 2017 onwards, steel prices will gradually edge higher as the global steel surplus will narrow due to Chinese supply moderation.

Steel Price Forecast
2014 2015 2016f 2017f 2018f 2019f...

Ukraine Metals

BMI View:

BMI View: We maintain our average zinc price forecast for 2016 of USD1,750/tonne. We expect zinc prices to reach a floor over the first half of 2016, and begin to stabilise thereafter, as production cuts shift the market to a deficit.

Global - Zinc Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f

Ukraine Metals

BMI View:

BMI View: Lead prices will gradually edge higher as the global lead market will shift into deficit by 2017 as production growth will slow over the coming years.

BMI Lead Price Forecast
Current* 2016f 2017f 2018f 2019f 2020f


Ukraine Mining

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BMI View : Ukraine's mining output growth will contract as ongoing hostilities between the Ukrainian government and pro-Kremlin separatists have significantly damaged mining infrastructure and the country's investment outlook. Despite these dynamics, Ukraine's mining sector holds significant growth potential due to the country's vast mineral reserves.

The economic and political situation in Ukraine is extremely volatile and considerable downside risks remain with regards to the country's mining sector. As a result, we expect Ukraine's mining sector growth will contract by 1.0 y-o-y over 2015-2019. Despite this, the country's mining industry value will grow from USD6.8bn in 2015 to...

Oil & Gas

Ukraine Oil & Gas

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BMI View: A volatile security situation and continuing geopolitical tensions hamper exploration and production activities in Ukraine. Regulatory challenges, illustrated by recent tax hikes on oil, gas and mineral extraction, are expected to act as a further deterrent to investment in Ukraine's oil and gas sector. The gas deal between Russia, the EU and Ukraine signed in September 2015 will supply sufficient gas for Ukraine to get through the 2015-2016 winter with an uninterrupted supply. A harsh winter however would severely deplete storage and force Ukraine to accelerate its gas efficiency plans moving into winter 2016.

Headline Forecasts (Ukraine 2013-2019)...


Ukraine Petrochemicals

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Ukraine's petrochemicals industry will not pick up in the context of the current circumstances. We maintain this situation will endure until amelioration in the political, economic and security situation comes through. In terms of consumption, the market will remain well below the 2007 peak over the forecast period and while growth may return, recovery will be impeded by the country's political splits and economic slump.

Most of Ukraine's refineries remained closed in 2015 leading to a severe underutilisation of its refining capacity with knock-on effects for the country's embattled petrochemicals industry, which lacks sufficient local feedstock access. Although the bulk of the petrochemicals industry is in the west of the country, a lack of access to markets in the east simply compounds its problems. In 2016, we believe that the country's political and economic crisis will drag on and curtail exports....

Pharmaceuticals & Healthcare

Ukraine Pharmaceuticals & Healthcare

BMI View:

BMI View: Ukraine's negative pharmaceutical trade balance will remain and continue to widen to 2019 as the country's political and economic landscapes hamper its local business development. A rising demand for medicines will force the Ukraine to continue seeking its medicine supply from abroad, though the country's severely weak foreign exchange rate will limit revenue-generation for multinational drugmakers.

Headline Expenditure Projections

Pharmaceuticals: UAH40.24bn (USD3.35bn) in 2014 to UAH46.84bn (USD1.95bn) in 2015; +16.4% in local currency terms and -41.7% in US dollar terms. Forecast unchanged from Q416.

Healthcare: UAH114.62bn (...


Ukraine Power

BMI View:

BMI View: The immediate outlook for electricity generation in Ukraine is poor, with an official state of energy emergency still in place in parts of the country. Despite a ceasefire agreement in 2015, reports of fighting in eastern Ukraine continue. That said, we expect power generation to stabilise in 2016 as conditions improve marginally, and see total generation returning to near-2014 levels.

Headline Power Forecasts (Ukraine 2015-2021)
2015e 2016f 2017f 2018f...

Real Estate

Ukraine Real Estate

BMI View:

BMI View: With no end in sight for the political and economic crisis that shook Ukraine in 2014, we forecast the commercial real estate sector to continue to suffer. Economic and political uncertainty remain a decisive obstacle for investors to enter the market while growth is contracting or stagnating.

As the political crisis will remain finely balanced between a renewed ceasefire and escalation in 2015 Ukraine is attempting to emerge from the economic depression that have seen rental prices tumble in all three sub-sector in BMI's Real Estate report - office, retail and industrial. Industrial has the lowest rental rates of the three, with previously reported industrial cooperation between Ukraine and Russia being highly unlikely due to the current circumstances. The proposed free-trade agreement with the EU from September 16...


Ukraine Telecommunications

BMI View:

BMI View: The Ukrainian telecoms market faces strong growth headwinds, ranging from the uncertain political climate through to low consumer spending power and market saturation. The move to 3G has begun in earnest and mobile ARPUs have either stabilised or begun to tick upwards. Although the wireline market is shrinking due to mobile substitution and the retirement of ageing infrastructure, FTTx investments come in response to rising demand for premium digital content. The market will support existing players, but there are few opportunities for new entrants.

3G Migration Underpins Growth In Saturated Market
Ukraine Mobile Market Forecasts


Ukraine Tourism

BMI View:

BMI View: The tourism industry in Ukraine continues to struggle in the wake of the domestic security crisis, as well as the ongoing regional political tensions. Arrivals to the country halved in 2014 and will see a further fall in 2015 as visitors remain deterred by safety concerns. At present we are forecasting a tentative return to growth from 2016 onwards, however this is heavily dependent upon an improvement in the geopolitical situation. Regardless of this growth, arrivals will remain well below 2013 figures creating a highly challenging operating environment for the country's hotels and other tourism related sectors.

Key Forecasts (Ukraine 2012-2019)


Ukraine Water

BMI View:

BMI View: The Ukrainian water sector is in dire straits. The continued domestic conflict in the east, in conjunction with the annexation of Crimea by Russia, the consequent shutting off of supplies and destruction of water infrastructure in much of these regions, has resulted in severe water shortages. We expect these to continue over the second half of 2015. In addition, the central and western regions of Ukraine are facing issues with regards to the powering of their treatment facilities, owing to the shutting off of gas supplies from Russia.

The volatile political situation in Ukraine continues, as violent conflict between separatist and governmental parties resumed in late 2014. It remains to be seen if the Minsk II ceasefire agreement from early 2015 will gain any sort of significant traction - at present reports suggest the ceasefire is being...

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