Macro: CEE Special - Trip Note Ukraine

- The new administration is pushing forward in a "turbo regime", conducting reforms in many areas not touched in the past (like land reform). Though, the speed and quantity seem to go before quality and coordination, so some laws have likely to be amended/improved. Further progress in deescalating the Donbas conflict should not be ruled out.

- The economic performance is somewhat mixed, with consumer-oriented sectors doing quite well thanks to recovering wages, remittances and a good harvest, while industrial exporters blame strong FX appreciation in 2019 for weak performance. With inflation at record low, substantial further interest rate cuts in H1 are expected.

- The IMF is seeking reassurances from the government (i.e. a law) that the issue of "PrivatBank" will be contained, amidst hundreds of pending lawsuits. So, we would not be surprised if IMF funding is delayed to late spring.

- Financial markets, though, are still favourable, demonstrated in successful domestic and international bond placements. However, the currency took a hit in early 2020, after a record appreciation in 2019.

This Research was produced and first published by Raiffeisen Bank International AG which is supervised by the Austrian Financial Market Authority and the National Bank of Austria.