In September, neither Brexit nor the trade war came close to a denouement. Moreover, after the attack on the largest oil refinery in Saudi Arabia, an increase in tension between Saudi Arabia and Iran can be noted, which leads to an increase in oil prices. Economic data released in September continue to indicate a slowdown in the growth of major economies, especially in the manufacturing sector. In response, both the US Federal Reserve and the ECB not only lowered rates, but the ECB also resumed the quantitative easing program, and the Fed was forced to inject liquidity into the market through repo transactions that were not typical for itself. As a result, financial markets closed the month on a completely positive wave, the S&P 500 index added 1.7%, and indices grew in China and Europe. In Ukraine, meanwhile, after three months of deflation caused by the strengthening of the hryvnia, inflation for 9 months was only 3.3%! Which, by the way, suggests that the real rate of the NBU is prohibitively high and will soon be significantly reduced.
After the really impressive victory of Zelensky and his political force in the elections, work and the first problems begin. The IMF mission left without agreeing on the next tranche, and among the problems is the uncertainty surrounding Privatbank. The first high-profile resignation shocked the team: the head of the National Security and Defense Council Danilyuk left the post and among the reasons also named issues with Privatbank. Of course, there is no urgent need for a new tranche right now and Ukraine can afford to spend some more time on negotiations, but we do not think that it is in principle possible for Ukraine to abandon the IMF program. The news that land reform will still not allow foreigners to buy land, and therefore there will be no attraction of foreign capital to the country, about which we have repeatedly written, which, in turn, will lead to more modest growth in the national economy, has become really negative. . However, the low comparison base and the stabilization of the financial market and the hryvnia exchange rate alone allow the economy to accelerate, but we are probably not talking about a “qualitative leap”. We also venture to suggest that the peak of Zelensky’s rating is already behind and sooner or later questions will arise about the solidity of his political force. We expect continued moderate economic growth in Ukraine, financial stability, and we will follow the development of events around the IMF and Privatbank.
