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Maxim Boroda writes: Despite positive macroeconomic indicators, Ukrainians gloomy about political moves took by new government.

Ukrainians are once again pessimistic about the economic situation and their personal welfare.

The sweltering summer burnt the wings of optimism and spoiled consumer moods. After three quarters of growth, the consumer mood crashed in June-July by 10.7 points, to 86.4 out of 200 points. This is the result of a joint research by GfK Ukraine market research company and the International Centre for Policy Studies, a non-government organization.


CCI is the Consumer Confidence Index;
ICS is the Index of the Current Situation;
IEE is the Index of Economic Expectations.

There are many reasons for it, both economic and socio-political.

Consumer moods of the Ukrainians have always been very politicized. So, political squabbles and election promises have been a no less important determinant consumer behavior than drops in the national currency rates or growth of their income. It is this political background that caused the initial ascent, and it’s also at the root of the current depression.

Having started after the victory in the first round of presidential election, the powerful information locomotive of the Party of the Regions confidently pulled the light carriage of consumer moods of the population to the brighter future so beautifully described in the election leaflets.

However, the election ended with a victory and the landscape started to change: instead of the expected reform came tax repressions, while the promised “improvement of life today” is hiding somewhere beyond the horizon of International Monetary Fund’s demands.

The election ended with a victory and the landscape started to change: instead of the expected reform came tax repressions, while the promised “improvement of life today” is hiding somewhere beyond the horizon of International Monetary Fund’s demands.

The summer heat affected the grain crop as well as melting the government’s rating. So, the president lost nearly 15 percent of his electorate between May and August, while the Party of Regions – 14 percent, according to the data released by Razumkov Center, a think tank. It’s rather likely that these very people added to the ranks of pessimists in terms of consumer moods.

Today’s economic realities also fail to improve the opinion of the government or consumer moods. The problem lies not in macroeconomic tendencies that generally are not so bad. In June alone, the State Statistics Committee reported an 8 percent growth in average salaries, 5 percent reduction in unemployment and back wages, and even deflation of 0.5 percent.

The reason for people’s anxiety and disappointment lies elsewhere. Firstly, it’s related to the speed of economic revival that reminds of driving in Kyiv: you may have spent a long time on the road, but have not moved an inch.

Secondly, it’s about the little things, such as the government’s intention to hike energy prices and increase the pension age. They remain unnoticed by the official statistics, but make the Ukrainian consumers’ hearts beat uneasily.

These are the very things that spoil consumer moods. Each one of them is worth a kopeck. But put them together, and you get a hryvnia.


Maxim Boroda is head of the social economy program at the International Centre for Policy Studies, a Kyiv think tank. More information on www.icps.com.ua.