Вы находитесь на странице: 1из 19

Ukraine

Macroeconomic Outlook

EM Research | October 2011

Ukraine macroeconomic overview


Key points

Ukraine is gradually recovering from the 2008 crisis, although it carries a high degree of vulnerability to external demand and commodity prices. Its output is still below the level in 2007 as opposed to CIS peers. GDP growth is estimated to have grown by 5.3% in Q1, slowed to 3.8% in Q2 and rebounded in H2 on a strong harvest. Growth could reach 4.5% this year and slow considerably in 2012 on global demand. Higher social expenses and state investments are expected to give short-term support to domestic demand in H2 2011. Rising imports and a likely deterioration of Ukraines terms of trade - defined as steel export versus energy import prices pose a risk to Ukraines current account balance. It stood at 2.8% of GDP in August YTD and may reach 6% in 2012 in case the current gas contract applies. These increased exchange rate risks due to Ukraines external financing constraints. NBU reserves dropped from $38.2bn to $35bn in September and without unblocking the IMF loans Ukraines external liquidity would weaken further next year. The next IMF mission is due in Oct/Nov. Deputy PM Tigipko is proposing full program compliance to avoid having to look eye-to-eye with another crisis. The freezing of capital markets for Ukraine limit the governments loan options. Ukraines fiscal position has improved and default is not a threat at present. The Jan-Aug. state budget balance is -0.4% of GDP. With 2.4% GDP cash reserves the Treasury has already pre-financed Ukraine's net borrowing need for the year. The gross issuance is, however, being increasingly monetised. Next years domestic budget (re-)financing may require higher NBU purchases. External debt service may require the use of FX reserves. UAH one-year NDF yield reached UAH 10 against the USD or nearly 30%. (compared to 8.5 in mid-summer). Domestic government bond yields rose to 14% - 17% on one-year to four-year bonds and newly issued USD-indexed three-year UAH bonds 8.2%. The market challenge highlights the importance of Ukraines IMF program.

EM Research | October 2011

Ukraines economic recovery has underperformed CIS peers..


Ukraines economic output still below pre-crisis
Real GDP level 2007=100

The inventory cycle has been driving growth


Private consumption is taking over, while net export contribution is negative. Weaker external demand should be partially offset by higher social expenses and state investments next year.
20 15 10

GDP growth has been growing at an annualised pace of c. 4% y/y. The global growth outlook made us revise Ukraines growth forecast lower to 4.5% this year. It is likely to slow considerably in 2012.

120

115

Kazakhstan Turkey Russia Ukraine

110

5
105

0 % -5 Net exports -10 -15 Investment Consumption Real GDP growth

100

95

90

-20
85 2008 2009 2010 2011

-25 2007 2008 2009 2010 2011 E

Source: IMF, Commerzbank estimates

EM Research | October 2011

.. but has gained momentum by h1 2011


Credit to private sector % y/y
Ukraines credit markets are still impaired, but credit intermediation has resumed and domestic demand has been strengthening
100 Kazakhstan Ukraine Russia

Industrial production, 3mma % y/y


Ukraines industry posted 9% growth in H1 2011, led by manufacturing. The metallurgy sector has posted double-digit growth but could start to face headwinds from the global economy.
25 yoy (%) Ukraine Russia Kazak hs tan

80

15

60

40

-5

20

-15

-25

-20 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11

-35 Mar-07 S ep-07 Mar-08 Sep-08 Mar-09 S ep-09 Mar-10 Sep-10 Mar-11

Source: Ecowin, National Central Banks, Commerzbank estimates

EM Research | October 2011

Foreign trade
Exports, imports and trade balance
Ukraine remains exposed to commodity price risks. Trade exposure to Asia could soften the export shock in case European demand falls.
80 60 40 20 % 0 -2.0 3.0 Trade balance 6mma rhs, U$ bn Imports 6mma % y/y lhs Exports 6mma % y/y lhs

Commodity structure of exports


Other 28% Agriculture 8% Minerals 13% Chemicals 7%

8.0

-20 -40 -60 -80 Jan-07 Oct-07 Jul-08 Apr-09 Jan-10 Oct-10

-7.0

Machinery 11%
-12.0 Jul-11

Base metals 33%

Ukraines export market share in world imports


0.50% 0.45% 0.40% 0.35% 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% 0.00% 1Q-02 1Q-03 1Q-04 1Q-05 1Q -99 1Q-00 1Q-01 1Q-92 1Q-93 1Q-94 1Q-95 1Q-96 1Q-97 1Q-98 1Q-06 1Q-07 1Q-08 1Q-09 1Q-10 1Q-11

Export structure by destination (% share)


40 35 30 25 20 15 10 5 0 CIS Europe Asia Africa A merica 7.0 5.9 5.3 30.8 36.5 31.8 26.9 25.1 26.7 2005 2010

3.9

Source: Ecowin, National Central Banks, Commerzbank estimates

EM Research | October 2011

Commodity trade balances in Europe


Net export/import(-) of key commodities, % GDP
-10 Kazakhstan Russia Ukraine South Africa Bulgaria Poland Romania Czech Republic Hungary Turkey -5 0 5 10 15 20 25 30 -12 Kazakhstan Russia Romania Poland Turkey Bulgaria Hungary South Africa Czech Republic Ukraine

Net export/import(-) of energy, % GDP


-8 -4 0 4 8 12 16 20

Source: CEIC, UN Comtrade, Commerzbank Corporates & Markets

EM Research | October 2011

Ukraines terms of trade


Minister of Economy Kliuyev stated that the 2012 budget is based on $415 gas price, calculated according to the supply contract. This would widen Ukraines energy trade deficit by $2.2bn. An additional 10% decline in steel prices would add $2bn deficit. A combined terms of trade impact would be around $4.2bn or 2.5% of GDP (*base case). If oil declines by 30% and Ukraine buys the fixed contract amount (33bcm) at c. $352, and steel prices drop by 10%, the net trade impact is c. $2bn (1.1% of GDP). A new gas deal with Russia is in the pipeline..

Gas prices by Gazprom


TTF spot average

Trade balance and energy imports


At *base case terms of trade projection
Energy import 25 Trade balanc e Energy trade balance

Average Europe
20

Belarus 1Q 2011
15

Ukraine 1Q 2011

264
10

Belarus 2Q 2011
5 U$ bn

Ukraine 2Q 2011

295

0 2007 2008 2009 2010 2011(janJune) 2011 F 2012 F

Belarus 3Q 2011
-5

Ukraine actual 3Q 2011 TTF current spot price Ukraine 3Q 2011 no discount U$ 0 100 200 300

355

-10

372

-15

455 400 500

-20

-25

Source: Ecowin, National Central Banks, Commerzbank estimates

EM Research | October 2011

The steel sector challenge


The steel sectors net margin could fall below its level during the 2009 crisis in case of the combined terms of trade impact of 10% weaker steel demand/prices and unchanged gas contract. This highlights the importance of a gas new gas deal.

Steel output strong in h1, terms of trade turning


80 Steel output % y/y

Steel trade margin as % of GDP


(steel exports net of energy imports)
10.0 9.0

60

8.0
40

7.0 6.0

20

5.0
0

4.0 3.0

-20

2.0
-40

1.0 0.0

-60 Jan04 O ct04 Jul05 Apr06 Jan07 Oct07 J ul08 Apr09 Jan10 Oct10 Jul11

2005

2006

2007

2008

2009

2010

2011 F 2012 F

Source: Ecowin, Commerzbank estimates

EM Research | October 2011

The gas sector challenge


Ukraine is one of the least energy-efficient countries worldwide and highly dependent on imported gas. Investment in exploration, extraction and transportation is insufficient, domestic production is below potential. Gas transit through Ukraine is at risk due to deteriorating gas networks Transit revenues amount to c. $2bn Reforms initiated under the IMF program include (i) gradually bringing domestic gas prices to import-parity (suspended), (ii) liberalisation of the gas sector and unbundling of Naftogaz; adopting separate cost centres for gas imports, domestic gas production and gas transit, (3) modernisation of the gas transit infrastructure. Gazprom has pushed for closer working relations with Naftogaz: President Yanukovych offered Russia a share in Ukraine's gas transit network. A consortium with Russian participation would be set up to manage Ukraine's pipelines. According to Russian government sources, Ukraine would receive 20% of shares in the consortium. Another 20% will be held by one German company and the rest by Gazprom. Gas extracted domestically could be exported to Europe to offset the losses on high import gas price if those remain as per the gas contract this year and next.
300 80% 250

Domestic gas prices well below import-parity


400 % of import price, rhs Price U$, lhs 350 107% 107% 100% 100% 120%

200 46% 150

60%

40% 100 25% 20% 50

0 Households Utility companies Budgetary institutions Industries Import price

0%

Source: Commerzbank estimates

EM Research | October 2011

The structural challenge


Economic reforms slowly advance; (i) the pension reform will come into force on 1 October 2011, (ii) land reform and a free land market could be established next year, (iii) the restructuring of the gas sector is likely to gather momentum. Additional privatisation in the energy distribution is being tendered ($300m). Fiscal stabilisation has made substantial progress, while structural weaknesses remain:

Productivity level
GDP per person employed
70,000

World Bank doing business ranking


Singapore Hong Kong, China 1 2 5 22 54 59 65 68 79 123 127 145 0 50 100 150

60,000

United States
50,000 c onstant 1990 PPP $

Germany Azerbaijan Kazakhstan

40,000

30,000

Turkey
20,000

Belarus China Russ ia

10,000

0 Brazil Turkey G ermany Hong Kong, China United States India Uk raine Russia China Azerbaijan World

Brazil Uk raine

Source: World Bank

EM Research | October 2011

Fiscal consolidation in progress


General government budget balance
The fiscal deficit has shrunk to 1.1% of GDP by Aug 2011 (12m rolling) vs. 2.8% under the revised budget due to 40% nominal increase in revenues. (The 8m deficit is $0.6bn or 0.4%). The revised 3.4% fiscal target could accommodate a wider-thanbudgeted Naftogaz deficit (0.8% GDP) and may facilitate unblocking the IMF loans.
50 % y/y 10

General Govt balance (% of GDP)


Fiscal stabilisation has advanced vs. other IMF program countries Ukraine targets 2.6% of GDP deficit (+0.8% Naftogaz) vs. 6.5% in 2010. The 2012 draft budget is conservative despite the 2012 elections at -2.5% of GDP. Fiscal conservatism has been a trademark of the Azarov government. Government reserves amount to 2.4% GDP.
3 2010
0

2011 1

40 -10 30 -20 20

-1

10

-40

UAH bn

-30

-3

-5

-50 0 -60

-7

Czech R.

Hungary

Latvia

Ukraine

Russia

Poland

Gen. govt. budget balance 12mma rhs Expenditures % y/y, lhs Revenues lhs -20 Jan-07 Oct-07 Jul-08 Apr-09 Jan-10 Oct-10

-70

-80 Jul-11

Source: Ecowin, IMF

EM Research | October 2011

Kazakhstan

Croatia

Lithuania

Turkey

Serbia

-10

-9

10

Domestic UAH sovereign debt market


Budget execution vs. pro-rata budget target
Feb 10,000 -10,000 -20,000 -30,000 -40,000 -50,000 -60,000 UAH mn Pro-rata budget (rev ised, 2.6% G DP) 2011 2010 2009 Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Govt. reserves and net position vs. NBU (UAH m)


80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Jan-08 10,000 20,000 Jul-08 Jan-09 Jul-09 J an-10 Jul-10 Jan-11 Jul-11 Central Bank net claim on central govt. Treasury deposits at the NBU (budget pre-financing) NBU holding of gov t. s ec urities

Government bond holdings by sectors (UAH m)


100,000 NBU 80,000 Banks Others Non-residents

Avg. yield at UAH treasury auctions


25

20

60,000

15 %

40,000

10

5
20,000

0 Jul-10 May-09 Sep-09 May-10


Jul-09 O ct-09 J an-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 J ul-11

Source: Ecowin, NBU


EM Research | October 2011
11

May-11

Nov-09

Nov-10

Mar-09

Mar-11

Mar-10

Jan-10

Sep-10

Jan-11

Jan-09

Jul-11

Jul-09

The public debt service


Doable with maturity extension of IMF liabilities, higher domestic yields
Total government debt maturities
Debt redemptions cluster at the end of the year in 2011 and rise significantly next year. Foreign debt service, including a partial redemption of the $2bn VTB loan this year, would amount to nearly $2bn. Including IMF liabilities ($4bn) Ukraines external debt service is $5.5bn in 2012 and may require the use of international reserves. Ukraines external liquidity benchmarks would weaken. Ukraines short-term domestic debt is large; it has to refinance UAH 30bn in 2012. The NBU has started to monetise UAH debt and may need to increase its purchases next year when redemptions increase. In the short term, the yield that stabilises Ukraines debt is below 14%. Over the long term at standard assumptions Ukraines debt ratio is set to decline. Co-operation with Russia in the gas sector, unblocking of IMF loans and maturity extension of fund liabilities could relieve external balance pressures in the near term.
Source: IMF, Bloomberg, NBU Commerzbank estimates
12,000 Other (VTB loan, Naftogaz, Ukrexim) Projected repayments to the Fund 10,000 Domestic UAH bonds International Bonds 8,000 U$ mn

6,000

4,000

2,000

2011 2012 2013 2014 2015 2016 2017 2018 2019

Domestic debt maturities by month (as at Sep 2011)


7,000 6,000 5,000 UAH mn 4,000 1,983 3,000 1,276 1,200 1,300 2,000 1,000 5 0 5 Oc t-11 Dec-11 Nov-11 5 4,543 5,746 4,823 4,668

3,660

3,012

3,560

2,500

2,143

1,234

1,639

525

May-12

Mar-12

Feb-13

Apr-13

Oct-12

33

2,147

Aug-13

2,590

May-13

Nov-12

Dec-12

Aug-12

Sep-12

Source: Commerzbank, Bloomberg, Global Source, IMF

EM Research | October 2011

Sep-13

Feb-12

Mar-13

Apr-12

Jan-13

Jan-12

Jun-12

Jun-13

Jul-12

Jul-13

2,753

12

External balance
A moderate crawling devaluation is conceivable under a negative external balance scenario
Balance of payments deteriorating
Ukraines current account position is under market watch due to its financing constraints. Under the fixed gas contract terms and weaker steel demand/prices the current account deficit could widen to $10bn or 6% of GDP. (A pessimistic scenario).
25 Capital and fin. a/c balance 4Q cum. Current ac c. balance 4Q cum. 20
6000

Capital flows: a fragile balance as IMF loans stalled


Ukraines capital balance is supported by Eurobond issues and inter-governmental loans (also privatisation this year). Without wholesale funding channels Ukraine may need to cover a BOP shortfall from reserves next year.
8000

mln U$

Other capital, loans and bonds Portfolio investment, net Direct investment, net

15

4000

10 U$ bn

2000

-2000

-5
-4000

-10
-6000

-15 1Q-06 4Q-06 3Q-07 2Q-08 1Q -09 4Q-09 3Q-10 2Q-11


-8000 1Q-06 4Q-06 3Q-07 2Q-08 1Q-09 4Q-09 3Q-10 2Q-11

Source: Ecowin, Commerzbank


EM Research | October 2011
13

External liquidity may weaken


In the assumed negative balance of payments outcome..
External debt as % of GDP
100 90 80 70 60 50 40 30 20 10 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total external debt % of GDP

External debt as % of exports


300 250 200 150 100 50 0 2006 2007 2008 2009 2010 2011 2012 2013 External debt to exports %

Gross reserves in months of imports


8 7 6 5 4 3 2 1 0 2007 2008 2009 2010 2011 2012 Gross reserves (months of next year's imports)

Short-term debt as % of gross reserves


160 140 120 100 80 60 40 20 0 2007 2008 2009 2010 2011 2012 Short term debt as % of gross reserves

Source: IMF, Ecowin

EM Research | October 2011

14

The market challenge..


MSCI indices, 2008 jan.=100
Ukraines relative performance in line with Russias
140 MSCI RU MSCI EM P FTS Ukraine

Sovereign CDS spreads (bps)


at 850bps Ukraines spread is second widest after Greece
6000 Uk raine lhs Poland Greece lhs Russ ia Hungary Italy 1200

120

5000

1000

100

4000
80

800

3000
60

600

40

2000

400

20

1000

200

0 1/28/2008 4/28/2008 1/28/2009 4/28/2009 7/28/2009 1/28/2011 10/28/2008 4/28/2011 7/28/2008 7/28/2010 1/28/2010 4/28/2010 10/28/2009 10/28/2010 7/28/2011

0 1/28/2008 7/28/2008 4/28/2009 7/28/2009 1/28/2010 4/28/2010 1/28/2011 10/28/2008 10/28/2009 10/28/2010 7/28/2011 4/28/2008 1/28/2009 7/28/2010 4/28/2011

Source: Ecowin, Bloomberg

EM Research | October 2011

15

Financial sector vulnerabilities


Short-term debt and FX liabilities are high, particularly when considering BOP and FX risks
Loan/deposit ratio
250

Short-term debt burden


ST external debt at remaining maturity, % GDP lhs 50 ST external debt at remaining maturity, % GIR, rhs 300 250 200 150 100 50 0 Ukraine Turkey Belarus Macedonia Kazak hstan Hungary Serbia Croatia Rus sia Poland Bulgaria 45 40 35 30 25 20 15 10 5 0
Estonia Ukraine Latvia

200

150 100 50

0 K azakhs tan Lithuania Romania Hungary Croatia Russia Turkey

Foreign currency loans as % of GDP


90 80 70 60 50 40 30 20 10 0 B elarus Mac edonia Bulgaria A lbania Lithuania Hungary Croatia Poland Turk ey Serbia Moldova Romania Ukraine Latvia Russia

FX loans as % of total loans


100 90 80 70 60 50 40 30 20 10 0 Poland Moldova Bulgaria Lithuania Belarus Hungary Croatia Ukraine Macedonia Romania Albania Russ ia Turk ey Serbia Latvia Foreing currenc y loans to households Foreign currenc y loans to corporates Indexed

Source: Ecowin, IMF, Fitch Ratings

EM Research | October 2011

16

Disclaimer
This document has been created and published by the Corporates & Markets division of Commerzbank AG, Frankfurt/Main or Commerzbanks branch offices mentioned in the document. Commerzbank Corporates & Markets is the investment banking division of Commerzbank, integrating research, debt, equities, interest rates and foreign exchange. The author(s) of this report, certify that (a) the views expressed in this report accurately reflect their personal views; and (b) no part of their compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or views expressed by them contained in this document. The analyst(s) named on this report are not registered / qualified as research analysts with FINRA and are not subject to NASD Rule 2711. Disclaimer This document is for information purposes only and does not take account of the specific circumstances of any recipient. The information contained herein does not constitute the provision of investment advice. It is not intended to be and should not be construed as a recommendation, offer or solicitation to acquire, or dispose of, any of the financial instruments mentioned in this document and will not form the basis or a part of any contract or commitment whatsoever. The information in this document is based on data obtained from sources believed by Commerzbank to be reliable and in good faith, but no representations, guarantees or warranties are made by Commerzbank with regard to accuracy, completeness or suitability of the data. The opinions and estimates contained herein reflect the current judgement of the author(s) on the data of this document and are subject to change without notice. The opinions do not necessarily correspond to the opinions of Commerzbank. Commerzbank does not have an obligation to update, modify or amend this document or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. The past performance of financial instruments is not indicative of future results. No assurance can be given that any opinion described herein would yield favourable investment results. Any forecasts discussed in this document may not be achieved due to multiple risk factors including without limitation market volatility, sector volatility, corporate actions, the unavailability of complete and accurate information and/or the subsequent transpiration that underlying assumptions made by Commerzbank or by other sources relied upon in the document were inapposite. Neither Commerzbank nor any of its respective directors, officers or employees accepts any responsibility or liability whatsoever for any expense, loss or damages arising out of or in any way connected with the use of all or any part of this document. Commerzbank may provide hyperlinks to websites of entities mentioned in this document, however the inclusion of a link does not imply that Commerzbank endorses, recommends or approves any material on the linked page or accessible from it. Commerzbank does not accept responsibility whatsoever for any such material, nor for any consequences of its use. This document is for the use of the addressees only and may not be reproduced, redistributed or passed on to any other person or published, in whole or in part, for any purpose, without the prior, written consent of Commerzbank. The manner of distributing this document may be restricted by law or regulation in certain countries, including the United States. Persons into whose possession this document may come are required to inform themselves about and to observe such restrictions. By accepting this document, a recipient hereof agrees to be bound by the foregoing limitations

EM Research | October 2011

17

Disclaimer (contd.)
Additional notes to readers in the following countries: Germany: Commerzbank AG is registered in the Commercial Register at Amtsgericht Frankfurt under the number HRB 32000. Commerzbank AG is supervised by the German regulator Bundesanstalt fr Finanzdienstleistungsaufsicht (BaFin), Lurgiallee 12, 60439 Frankfurt am Main, Germany. United Kingdom: This document has been issued or approved for issue in the United Kingdom by Commerzbank AG London Branch. Commerzbank AG, London Branch is authorised by Bundesanstalt fr Finanzdienstleistungsaufsicht (BaFin) and subject to limited regulation by the Financial Services Authority. Details on the extent of our regulation by the Financial Services Authority are available from us on request. This document is directed exclusively to eligible counterparties and professional clients. It is not directed to retail clients. No persons other than an eligible counterparty or a professional client should read or rely on any information in this document. Commerzbank AG, London Branch does not deal for or advise or otherwise offer any investment services to retail clients. United States: This document has been approved for distribution in the US under applicable US law by Commerz Markets LLC (Commerz Markets), a wholly owned subsidiary of Commerzbank AG and a US registered broker-dealer. Any securities transaction by US persons must be effected with Commerz Markets. Under applicable US law; information regarding clients of Commerz Markets may be distributed to other companies within the Commerzbank group. This report is intended for distribution in the United States solely to institutional investors and major U.S. institutional investors, as defined in Rule 15a-6 under the Securities Exchange Act of 1934. Commerz Markets is a member of FINRA and SIPC. European Economic Area: Where this document has been produced by a legal entity outside of the EEA, the document has been re-issued by Commerzbank AG, London Branch for distribution into the EEA. Singapore: This document is furnished in Singapore by Commerzbank AG, Singapore branch. It may only be received in Singapore by an institutional investor as defined in section 4A of the Securities and Futures Act, Chapter 289 of Singapore (SFA) pursuant to section 274 of the SFA. Hong Kong: This document is furnished in Hong Kong by Commerzbank AG, Hong Kong Branch, and may only be received in Hong Kong by professional investors within the meaning of Schedule 1 of the Securities and Futures Ordinance (Cap.571) of Hong Kong and any rules made there under. Japan: Commerzbank AG, Tokyo Branch is responsible for the distribution of Research in Japan. Commerzbank AG, Tokyo Branch is regulated by the Japanese Financial Services Agency (FSA). Australia: Commerzbank AG does not hold an Australian financial services licence. This document is being distributed in Australia to wholesale customers pursuant to an Australian financial services licence exemption for Commerzbank AG under Class Order 04/1313. Commerzbank AG is regulated by Bundesanstalt fr Finanzdienstleistungsaufsicht (BaFin) under the laws of Germany which differ from Australian laws. Commerzbank AG 2011. All rights reserved. Version 9.13

Comm erzbank Cor por ates & Markets Fr ankfurt London Commerzbank AG Commerzbank AG London Branch DLZ - Gebude 2, PO BOX 52715 Hndlerhaus 30 Gresham St reet Mainzer Landstrae 153 London, EC2P 2XY 60327 Frankfurt Tel: + 49 69 136 21200 Tel: + 44 207 623 8000

New York Branch Commerzbank AG 2 World Financial Center, 31st floor New York, NY 10281 Tel: + 1 212 703 4000

Singapor e Branch Commerzbank AG 8, Shenton W ay, #42-01 Singapore 068811

Tel: + 65 63110000

Hong Kong Branch Commerzbank AG 29/F, Two IFC 8 Finance S treet Central Hong K ong Tel: +852 3988 0988

EM Research | October 2011

18

Вам также может понравиться