Overview of political situation and its impact on business environment

Current overview

Ukraine is continuing its struggle against Russian-led military action in the east of Ukraine and attempts to regulate the conflict with the occupied Crimean peninsula as well. Moreover, the situation is exacerbated by the events around Crimean Tatars being trapped by the occupants on the territory of the peninsula. Subsequent trials conducted and accusations thrown on illegal political activity and attempts to break the existing order from the inside. The political persecution has already been claimed illegal with no sufficient background; however, international community with the world leaders on top has not done much to incline Russia to stop the intervention. The number of political prisoners to the neighboring aggressor as of today amounts to 38 officially claimed by the Ministry of Foreign Affairs. However, the number of Ukrainian military men caught and held hostages has not yet been announced since the officials lack information about all the dead in the war. Currently, Ukraine’s politicians are doing their best (at least that’s what they’re saying) to set all the prisoners to Russia’s regime free.

The negotiations have been held on the other fronts as well, yet, the violation of the Minsk agreements by the “rebels to the Ukrainian state” have shaken the fundamentals of the international laws and regulations. The OSCE representatives also report on blocked accessibility to certain areas of Donetsk and Luhansk regions. Since international organizations responsible for supporting global order cannot cope with the Russian invasion, many political analysts claim this war will most likely turn into the frozen conflict. World’s politicians have also divided into two camps: Russia supporters, however, with no vivid declarations but rather implied criticism toward Ukraine and appraisal of Vladimir Putin’s current policy; and those supporting Ukraine’s integrity and government’s orientation. The USA have practically immediately voiced their position against the invasion of the Russian armed forces to Ukraine and has imposed tough sanctions on the number of Russian politicians, businessmen, and industries. The European leaders almost unanimously announced their dissatisfaction with the military conflict and imposed economy related sanctions as well. Altogether, these conditions have had a crucial effect on the aggressor’s economy sector, although, the officials claim the opposite.

Impact on the economy

Since the ATO (the official name for the hybrid war in Ukraine) has started the IMF announce the fall of GDP by 2.1%. As for the Ukraine-Russian relationship, both parties have faced numerous financial loses since tight cooperation between the two for up to 25 years couldn’t have gone unnoticed. However, this is owing to Russia, Ukraine’s international trade has grown more to European, Asian markets as well as African, Turkish, Canadian and others (totally amounts to 52% with Europe solely). With Russia, this ratio today doesn’t exceed 5-7%. Due to the stabilization of the economy, many specialists return to Ukraine. Within the past 6 months, the come-back ratio increased by 7% if compared with 2015. Yet, the tendency reveals that many school-leavers opt for studying abroad with further staying and getting employed there.

Despite the political crisis, Ukrainian agricultural sector has successfully managed to export the goods to the European and Asian markets including UAE. Heavy metals industry has also found investors from EU and Asia despite the loss of a significant number of factories and productions in Donbas region. And, the last but not least – IT sector has shown extremely rapid and productive growth. Initially, specialists have been attracted by high salaries and opportunities of going on business trips abroad. However, today, IT outsourcing sector is way more than just money. Young people agree that they are also attracted and motivated to join the industry because of the atmosphere and prospects it offers.

IT industry alongside political crisis in Ukraine

As to the IT outsourcing area, software development services from Ukrainian companies have reached $5.5 billion and this number is to grow in 2017. The promising number of Ukraine’s talent pool suggests the growth at least tenfold within the next few years. Yet, this all will be implemented in case if Ukrainian authorities conduct certain reforms to support IT sector and developers from the existing red tape. If compared to 2015, when developers were out-flowing abroad to avoid mobilization to Ukraine’s Armed Forces, or running from the war in general. Back then, IT market of Ukraine was under the threat due to this loss of the specialists. Current 2016 trend of our IT has changed as the army got professionals, and there was no need for mobilizing civic people. Another favorable issue getting the specialists back was the salary – it’s practically equal to those paid in popular European IT destinations, but the life turned out to be more expensive in terms of rent, food and travel expenses. Moreover, current overview claim Ukraine has the fastest growing IT sector with over 100,000 specialists as of early 2016. This number is constantly increasing and we will inform on the related updates in our next articles.

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