The economy was shrinking in the third quarter. More companies have adopted hiring freezes, slashed salaries or laid off staff. Economic stagnation, corporate raiding and a dismal investment climate means that few Ukrainians saw their incomes rise.
But for some it keeps getting better. Ukraine’s 10 richest people, according to Forbes Ukraine, are worth an extra billion dollars compared to last year.
Even more impressive is the jump in the two latest full rankings by Korrespondent magazine (2010 and 2011), which shows the worth of the top 100 jump from $66 billion to $83 billion – half the country’s gross domestic product.
Despite coming in 109th in wealth per person, Ukraine comes in 23rd in a ranking of most expensive shopping streets (up three places compared to last year).
Luxury auto sales have also hit record highs – both Mercedes and BMW are set to see their best year ever in Ukraine, now the region’s second biggest market for premium car makers, after Russia.
But 2013 is not looking as bright for the rich. Steel exports are tumbling, agricultural revenues are down, and devaluation fears have driven rates up to the point where, for a small business, getting a loan is like playing Russian roulette.
Just like other countries in the region, Ukraine is suffering from global factors, but unlike them it can no longer bet on domestic consumption to soften the landing.
This is the problem of highly unequal economies. Whenever a country’s economy starts to stumble it can be revived, at least partially, by stimulating the small, prolific consumers and businesses: removing regulations, transferring wealth or borrowing from the future.
But Ukraine lacks a big middle class, fiscal opportunities or the political will to use these methods effectively.
However, in a highly stratified society, where economic power is married to political clout, the winners get it all. Hence the raids and rules and rigged privatizations that squeeze ever more revenue towards the top.
But there’s a reason why the pyramids have survived millenia, why towers crumble after centuries and why stilt-walkers come down after a couple of hours performing. In 2009, Ukraine saw the instability that inequality breeds. It looks like it’s time for another round.
