Effect of the interference of the waves of foreign and domestic economic conjuncture in Ukraine's economy

O. Pustovoit

Economy and Forecasting, 2012, issue 2, 99-117

Abstract: It is argued that acceleration of economic growth in Ukraine should not be closely associated with the formation, in the future, of a favorable economic conjuncture for export of the traditional domestic produce and maintaining its price competitiveness at the expense of the hryvnia devaluation. The above mentioned conclusion is supported by the results of the research on the interference effect, in 2000-2011, of foreign and domestic conjuncture waves on this country's domestic market. The consequences of their interaction appear to be contradictory. In particular, beginning with 2005, improved conjuncture for domestic exports caused increased aggregate demand on the domestic market. However, that encouraged domestic producers to expand imports, not the volumes of their own output, which led to macroeconomic disproportions in Ukraine's economy. The main of them were the increase in the negative trade balance, restriction of gross savings and investment activities in favor of the imports etc. And their tendency to increase speeds up the economy's movement towards another cyclical crisis. It is possible to alter that scenario in Ukraine through the development of a consistent state policy of the development of domestic market. Among its priorities, it is advisable to choose the following: import substitution, deepening the level of procession of the available natural resources, production of new items for the domestic market, and radical change of investment climate.

Date: 2012
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