Economy situation in Ukraine

[Muddy]

Are people who work for the government or city getting paid their full salaries?
Is the economy getting better there?

[ECOCKS]

No and No.

[JR]

Neither are the Russians. I have talked to many people who have had their salaries reduced, by as much as forty percent! But they still have to work the same hours.

[kievstar]

There are estimates of up to 300,000 people who had jobs in Kiev and have left to find work in other cities or to go back to family to live.  Many expats have been fired and are living Ukraine.  Housing prices are falling every month as well as rent prices.

But it is going to get much worse.  Even with a weak currency nobody is buying there products. 

That being said retirement home business is booming.  Mechanics are making 50,000 - 75,000 usd a year.  For the guys out there who are licensed to repair cars you can make a decent living in Ukraine.  Specifically if you can fix BMW, Lexus, Mercedes, Toyota Land Crusier.

But with lower start up costs (cheap skilled labor, low rents) many new business are being made in Ukraine.  Many clever people getting very rich right now in Ukraine. The politicians are still making black money.

[facetrock]

Kievstar, What is your prediction? How much worse will it get? Will the currency fall farther, will the government default? I would be interested to know from someone who has lived there and spent alot of time there.

[Muddy]

If there are any articles about the Ukraine economy please post the link?

[Mir]

That being said retirement home business is booming.

Who lives there?

[kievstar]

Hi Mir, on retirement business it is growing.  45 million plus people live in Ukraine and many are old.  People now have money to put Granny in a nice place to live.  A lot of construction is going on right now for retirement homes and long waiting list.  Ukraine is famous for its healing centers in West Ukraine (not sure the right name I am looking for).  Also, they have a ton of nurses, doctors, etc at low wages.  But they lack retirement facilities. That is changing.  I will probably retire in Ukraine.  USA and West Europe in 25 years will be bankrupt due to socialist programs.

Facetrock, I no longer live in Ukraine I just visit my wife 1-2 times a month now.  Hard to say on the currency and default - people keep giving money to Ukraine government and the government does a good job of cutting social spending.  Only thing I know for certain is that housing prices and rents will continue to drop and more people will lose jobs.   I also now many new millionaires are being made who take advantage of the crisis. 

Muddy, Here is some links on Kiev in English.  Check daily on the first two links and they have tons of information. 

http://www.kyivpost.com/

http://kievukraine.info/blog/

http://www.whatson-kiev.com/index.php?go=News&in=cat&id=1

[emc]

The situation is quite difficult in Ukraine now, and none konws what will be in 2 days. Hard to find a job, and a good salary now is about 200 $ a month, though last year it was about 500-700$.

[tim 360]

EMC,  That is a large drop in monthly wages.  Are some people wages the same as last year or have all wages declined?  Do prices on everything go down or do they stay the same?  What type of effect does it have in the city you live in?  Is it noticeable as you walk the streets?  Thanks, tim360

[emc]

EMC,  That is a large drop in monthly wages.  Are some people wages the same as last year or have all wages declined?  Do prices on everything go down or do they stay the same?  What type of effect does it have in the city you live in?  Is it noticeable as you walk the streets?  Thanks, tim360

As far as I know, all wages are declined.
At the end of the previous year  1 dollar – 8-9 hrv. and at that time prices rose immediately. So people, who got salaries in hrv, became to earn twice less. Now prices are stable, now I mean April – May.  1 dollar now is 7.5 hvn and we think that by the end of May it can be about 7 hrv. Believe me, prices will be the same. And in such case people who get salaries in dollars will be in difficult situation as well.
As for my city, Odessa, I live in the center of the city, and I am shocked. Because about 20 places I know very well, and attended (shops, offices, restaurants, cafes) are closed. I do not know what will be with Ukraine in half of a year, but I am afraid that hard times for us even did not start yet. I do not know how people live in other cities of Ukraine, but think worse.

[Muddy]

Thanks of rht update for Odessa
I am planning to travel to Odessa in 2 weeks and will stay in the center(Deribosovskaya and Ekaterina)

[emc]

Thanks of rht update for Odessa
I am planning to travel to Odessa in 2 weeks and will stay in the center(Deribosovskaya and Ekaterina)

Derebasovskaya/Ekaterinenskaya is a good place to stay ) center of the city. and time for visiting is also good, the weather is nice. Be ready that prices are rather high in Odessa in comparison to other cities of Ukraine.

[kievstar]

Price for oil is cheaper this year in Ukraine so the prices of taxi's has dropped - at least in Kharkov and Kiev.  Hotels and apartments are cheaper as well as demand has dropped. 

But foreign goods are priced more towards the dollar and Euro.  So will adjust based on those currencies.  So very expensive for employee being paid in Ukraine dollars.

Consumption of booze is way up.  As its prices have remained low.

One thing that has gotten many Ukraine people in trouble is they bet on the Ukraine to usa dollar ratio.  I remember 1-3 years ago people in Ukraine telling me that it will be 3 to 1 or 2 to 1 of Ukraine dollar to USA dollar.  So they went out and changed mortgages and car credit into usa dollars so when the mighty Ukraine currency got stronger they would have a cheap mortgage payment.  These people also got paid in Ukraine dollars.  I told them all they were a fool.  Your base salary must be in the same currency you have personal credit.  Basic 101 when it comes to personal finance.  More than a million people in Ukraine did this and now there paying for it. 

I know many foreigners as well that fell for this.  Many of the apartments in Kiev with the biggest mortgage issues are Western Europeans.  They flipped apartments and were getting rich but got greedy.  They benefited from apartment increase and currency gain.  But all good things do come to an end. 

People I know in Kharkov have wages back to normal.  They do not see a change.  No different now than last several years. But they live within their means.  People I know in Kiev - mixed bag.  Some doing better, some worse, and some the same.  Probably 1/3 for each category.

There were many stupid small businesses in Ukraine which had a weak business model.  Most are now bankrupt.  In the long run good for these businesses to go bankrupt.  People in Ukraine were living a false dream - Kiev had no right to be one of the most expensive places to live in the World.

[Gator]

There were many stupid small businesses in Ukraine which had a weak business model.  Most are now bankrupt.  In the long run good for these businesses to go bankrupt. 

As should be expected when there is not a long history of venture capitalism, entrepreneurship, and business success. 

I dated a couple of RW whose new Russian husbands were making tons of money in the 1990s, living in huge houses (one with an indoor swimming pool), Red Square flats, Aspen type dachas.  These men put nothing aside, pouring their profits into leveraged expansion and spending, spending, spending on themselves.  When the downturn came in the late 1990s, poof!  I guess it is repeating itself.  How many generations before they learn?

People in Ukraine were living a false dream - Kiev had no right to be one of the most expensive places to live in the World.

That bewildered me so much, especially in comparison with Budapest and Prague.  I understood Moscow to some extent because of the petrodollars.  But Kiev?  Yes, it was a fantasy.

[Col HJ]

But foreign goods are priced more towards the dollar and Euro.  So will adjust based on those currencies.  So very expensive for employee being paid in Ukraine dollars.

Consumption of booze is way up.  As its prices have remained low.

One thing that has gotten many Ukraine people in trouble is they bet on the Ukraine to usa dollar ratio.  I remember 1-3 years ago people in Ukraine telling me that it will be 3 to 1 or 2 to 1 of Ukraine dollar to USA dollar.  So they went out and changed mortgages and car credit into usa dollars so when the mighty Ukraine currency got stronger they would have a cheap mortgage payment.  These people also got paid in Ukraine dollars.  I told them all they were a fool.  Your base salary must be in the same currency you have personal credit.  Basic 101 when it comes to personal finance.  More than a million people in Ukraine did this and now there paying for it. 

 Visiting my lady last summer in August I remember the exchange rate being around 4.55 to 1 and was a little miffed that my greenbacks had lost some of their buying power. Every store was full of folks buying like there was no tomorrow and consumer credit was at an all time high with largely European and American dollars backing these loans. About late August my girl gets a promo letter from her bank paying 7% interest on something resembling a simple savings account and your good Col was sorely tempted to scratch up 75 or 100K and make a few quick, tax free bucks. In a rare moment of wisdom I restrained myself and thank God I did. The folks that financed their new Lada for 1,000 hryvnia monthly notes are now paying 1,500 hryvnia as the exchange rate has "shat itself" and the Euro/American banks that backed these loans want their money. Many businesses large and small in the consumer goods industry have flopped or are struggling as their foreign supplied goods are still at prices agreed upon in 2008 while the hryvnia has lost 50% of it's value.

 Is tough times indeed, very tough.

[Mir]

I found eating out in resturants was about the same if maybe a little cheaper

[Mir]

Interesting that we are discussing the bad situation in Ukraine while Western economies steadily mover towards a deep abyss.

[ECOCKS]

Indicative of a larger problem:

Ukraine puts brave face on Euro 2012 decision
Reuters - Wednesday 13 May 2009, 14:31

KIEV - Ukrainian officials put on a brave face over UEFA's suggestion on Wednesday Kiev could be stripped of the final of Euro 2012 and its decision to delay naming any other host cities in Ukraine.

Michel Platini, head of European football's governing body, said the capital Kiev was the only Ukrainian city confirmed to co-host the European Championship with Poland, subject to strict conditions.

Lviv, Donetsk and Kharkiv would have to wait to November 30 for a final decision, whereas the Polish cities of Warsaw, Gdansk, Poznan and Wroclaw were confirmed as venues by Platini at a UEFA executive committee meeting in Bucharest.

Ukrainian officials interpreted Platini's comments as essentially selecting the four cities in the country and giving them until November to resolve issues of stadium building and infrastructure.

"We are assuming that cities will be distributed between Ukraine and Poland on a parity basis and that by (November) 30...three more Ukrainian cities will be placed on the schedule of preparations for Euro," Ukraine's Prime Minister Yulia Tymoshenko (pictured) said.

"So four cities from Ukraine and four from Poland will host Euro 2012," she told a news conference after a cabinet meeting.

Illya Shevlyak, chief executive of the Euro 2012 Coordinating Bureau, said: "It is important that Michel Platini recognised Ukraine's considerable progress in terms of its preparations for the European Championship in recent months.

"I think the UEFA decision is a positive signal that has to motivate Ukrainian cities to intensify their preparations," he told Reuters.

Neither local media nor the officials referred to Platini's comments that Kiev could lose the final unless it met specific conditions on the renovation of its Olympiskiy Stadium, infrastructure and hotels by the end of November.

       ######

Ukraine has massive infrastructure issues to deal with even without considering the UEFA award of the Euro 2012 games. This article gives you an indication of how they deal with these things internally. The political readers took this announcement and stated that everything is fine and they are progressing. In fact, the polish cities are right on track and Ukraine was warned that they have to get moving on their timelines while unemployment is rising, squabbles continue over the stadiums, there is no money for the necessary airport upgrades and construction of roads and hotels is at a standstill.

An interesting example, was at Shuliavska market where the overpass (5 lanes of automobile traffic, NOT a pedestrianwalkway mind you) was supported by scaffolding placed underneath. I was there one day when their public works department pulled up and took a hydraulic jack to lift the sections of scaffold and push wooden shims underneath to tighten the support. It was that way for over two years and the lift and shim process was apparently performed once or twice a month.

Then there is the sewage and fresh water distribution system in almost all the major cities. You can also note that there are still public water taps for when your building loses water. Those with construction backgrounds should take a close look at the high rise apartment buildings. Particularly note the corner edges of buildings less than 25 years old, they look like they were salvaged after WW2 bombing.

Finally, it is election year so figure how likely the politicians are to cut social spending on pensions and food support to start paying the hundreds of millions of USD necessary for the UEFA project and other projects.

Use your own judgment as to how likely they are to recover quickly or successfully.

[Gator]

Interesting that we are discussing the bad situation in Ukraine while Western economies steadily mover towards a deep abyss.

Abyss?  The fear of a depression is over, hence the small recovery in the stock market.  Nevertheless, the economy will decline some more before it starts to turn up again (e. g., unemployment will increase).  This will not change soon.  I see evidence of the downturn among my friends and neighbors, and that is bothersome.  America still has chimerical real estate and credit card issues to resolve.  Yet, fear not.  Just have to be nimble for a year or two.

Unlike the Euro banks,  American banks have mostly avoided the credit squeeze underway in Eastern Europe.  Yet, it will affect us too.  Eveything is connected.

[elliott]

...a good salary now is about 200 $ a month...

Two-hundred bucks a month! :whirling:   That's a good salary?!  I can't imagine what you'd call a poor salary.

emc - those are my initials!

[Ravens9273]

Two-hundred bucks a month! :whirling:   That's a good salary?!  I can't imagine what you'd call a poor salary.

emc - those are my initials!

Elliot

My wife worked 67 hours a week as a nurse and made $90 a month in Odessa.

[Muddy]

Elliot

My wife worked 67 hours a week as a nurse and made $90 a month in Odessa.

Raven,
May I ask how long ago?

[Ravens9273]

Raven,
May I ask how long ago?

My wife came to US in late February. Just prior to her coming that was her living.

[Mir]

Gator

Yes if we listen to the optimists what you write is true.
But there are a lot of people telling us otherwise.
The green shoots of recovery may be due to the money pouring in. Money being created from thin air.
This has the potential to create massive inflation and currency debasement.
Eventually the Chinese who hold a trillion or more of US debt might think they have had taken enough losses (due to fall in $) and dump the bonds for gold or euro or whatever.
Inflation will also force up interest rates and this can choke recovery in housing and credit markets.
Finally oil price can start rising again and cause a collapse in the recovery process.
I am afraid there are still too many dangers lurking around.