In June, the global picture has not changed much. Relative calm in developed markets and continued capital outflows from emerging markets. So, the S & P500 index added 0.5% a month, while the UX index lost 6.5%, but remains positive by 16% since the beginning of the year. Markets continue to react very sharply to the growing trade war between China and the United States, although the real effect of the already announced measures is not fatal, investors fear further escalation and its more global consequences. 2-3 years ago, the main threat to financial markets was considered the possibility of a sharp slowdown in the Chinese economy. Then it was avoided, but the problem did not go away. The result of measures taken by China to reduce financial risks was only that debts began to grow more slowly, moreover, liquidity in the financial system of China is limited. In other words, a trade war can and does not pose a significant threat in itself, but together with the accumulated imbalances in the Chinese economy can become a trigger for a sharp slowdown in the Chinese and global economy. In addition, many fear that as a response to US tariffs, China may devalue the yuan, which will affect many other currencies of developing countries.
The fact that the probability of a slowdown in the global economy has increased does not mean that this is the most likely scenario. It is possible that this can be avoided, of course, not without the help of central banks, which, after seeing a slowdown, may postpone raising rates. However, as we have already mentioned, Ukraine is to some extent protected from external shocks thanks to the early phase of the economic cycle and especially the current IMF program. In addition, rates on which Ukraine could place bonds are already too high. The de facto capital market has already been closed to us, therefore, the further growth of rates due to the global crisis will not change the situation with the financing of the budget. Therefore, we continue to expect a further slow recovery of the Ukrainian economy.
