Ukraine Market Report — Q2 2012
The football tournament in June delivered new airports, stadiums and roads, and a rare demonstration of what Ukraine can build when a deadline is externally imposed and non-negotiable.
Overview
Ukraine co-hosted the European football championship in June, with matches in Kyiv, Lviv, Kharkiv and Donetsk.
The economic significance of the tournament is not the visitor spending, which was modest and temporary. It is the infrastructure built to a fixed external deadline.
What the programme delivered
Airport terminals in all four host cities, several of them replacing Soviet-era facilities that were the binding constraint on air connectivity.
Road upgrades on the corridors between the host cities.
Stadiums, of which the commercial usefulness afterwards varied considerably by city.
And, less visibly, a demonstration that Ukrainian public infrastructure delivery could meet a hard deadline when failure would be internationally visible.
The airports are the durable gain. Improved terminal capacity in Kyiv and Lviv changed what was possible in air connectivity, and the low-cost carrier expansion of 2018 and 2019 used capacity built for this tournament.
What it cost and what it did not fix
The programme was expensive, financed substantially by the state at a time when the fiscal position was deteriorating, and it ended in June with nothing scheduled to replace it.
Construction employment fell sharply in the second half of the year. An infrastructure programme with a fixed end date and no successor produces exactly that.
Macro position
Growth near zero for the half year. Exchange rate fixed, reserves falling. Metal exports weak. Inflation very low.
Sectors
Construction — peak in the first half, sharp decline in the second.
Hospitality and transport — a temporary boost around the tournament, and a permanent improvement in hotel stock in the host cities.
Metals — weak.
Agriculture — the year's reliable performer.
What the quarter settled
That Ukraine could deliver large infrastructure on schedule when the deadline was external, fixed and reputationally consequential.
That is a genuinely useful finding, and it explains why donor-funded and deadline-bound projects have a better completion record here than domestically scheduled ones.
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