1. No category

3
Russia was ‘stuck in transition’ already before
Ukraine crisis. Key challenges (old and new):
 Energy exports and growth sustainability
-
Increased pressures on energy supply diversification (both in the EU and RU)
-
Sectoral sanctions already start to bite, no longer largely symbolic
-
Investment climate already suffers, imports and FDI down, capital flight
 Diversification and modernisation of the economy under threat
-
Growing reform pressures owing to sanctions?
-
Yet modernisation is more difficult without more FDI!
 Stability of the ruling elite
-
Putin’s ratings grow, Russia’s ratings fall, rouble and MICEX fluctuate
-
Yet this may change with more hardship …
 Integration on the post-Soviet space derailed/fails?
-
Crimea not really helpful for Putin’s Eurasian integration project
-
New design/reset of EU neighbourhood policies?

7
GDP growth: original (pre-sanctions) scenario
contributions of main components to GDP growth, in pp
Private consumption
State consumption
Gross capital formation
Net exports
GDP growth, in % (rhs)
15
15
8.5
10
10
7.2
7.3
5.1
5
8.2
6.4
10
5.3
4.3
4.7
4.5
3.4
1.3
1.6
2.3
3
5
0
0
-5
-5
-7.8
-10
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source. wiiw Annual Database, national statistics, own estimates.
2009
-10
2010
2011
2012
2013
2014
2015
2016

8
GDP growth: current (March 2015) scenario;
contributions of components to GDP growth, in pp
Private consumption
State consumption
Gross capital formation
Net exports
GDP growth, in % (rhs)
Costs of the conflict: about 1% of GDP in 2014 (close to EUR 20 billion) and
6% of GDP in 2015 (EUR 110 billion) due to lower GDP growth, falling
15
15
investments compared to the pre-conflict scenario
8.5
10
10
5.1
5
7.3
7.2
6.4
8.2
10
5.3
4.7
4.5
4.3
3.4
5
1.3
1.9
0.6
2.0
0
0
-5
-5
-10
-7.8
-3.9
-10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: wiiw Annual Database, national statistics, own estimates.

17
Top 15 most competitive industries of Ukraine
(bubble=RCA), 2013

18
Regional composition of exports, 2012
(pies proportional to exports in USD mn)
Russia
Belarus
Poland
SK
HU
MD
RO

21
Specialisation of Ukraine’s regions by employment, 2013
(pies proportional to the number of employees)

26
Some preliminary conclusions for Ukraine
 New specialization patterns are hampered by disrupted relations with
Russia. Resulting economic repercussions will hurt not only in the short
run, but also in the medium and long run.
 Ukraine’s position between the EU and the Russia-led Eurasian
Economic Union (EEU) and its nearly equal (yet asymmetric)
dependence on both markets puts forward a challenge how to maintain,
expand and deepen its trade relations in both (i.e. EU and “eastern”)
directions simultaneously.
 Russia demands changes in EU-Ukraine DCFTA and threatens to
revoke Ukraine-CIS Free Trade agreement, imposing tariffs on
Ukraine’s exports.
 Delay in the implementation of DCFTA also results in a delay of its
expected benefits.
 Annual loss for Ukraine from the break-up of economic relations with
Russia is estimated at USD 33 billion; the cumulated overall losses at
USD 100 billion.

31
Thanks for your attention !!!
