WHEN OIL GREW, RUSSIA GREW; WHEN OIL FELL, RUSSIA ENSURED UKRAINE FELL. IF DUBAI IS A CASE IN QUESTION, THEN THE FACT IS THAT RUSSIA AND UKRAINE TOGETHER HAVE THE POTENTIAL TO DEBILITATE THE COMPLETE GLOBAL ECONOMY. SAYS GYANENDRA KASHYAP
If you were to walk up the Frunzenskaya Street in Moscow right up to address number one, on a quiet wintery day you might just be able to hear the echoes of a brilliant ensemble playing somewhere around. If you tried hard, you’d realise that the sounds are coming from right behind the monolith doors engraved into the building facing you – that’s the building housing Moscow’s State Academy of Choreography, better known as the Bolshoi Ballet Academy, one of the world’s most renowned opera houses. If you were luckier, you might get to even steal an entry into a show at the Bolshoi. And better, if you were an economist, it wouldn’t have taken you a Kremlinisque second to notice the similarities that the Russian economy, and for that matter, the Ukrainian economy, have with ballet performances at the Bolshoi – with their splendiferous share of joy, sorrow, dramatics, emotional crashes, violent drama and an ending too, happy or sad depending upon which part of the official release you were fed. Today, Ukraine and Russia together have the power to break the back of the global economy. And if the world really needs an answer to which of the two could be the next Dubai, Ukraine unfortunately tops the chart.
Ukraine has the world’s highest cumulative default probability of 57.3%, almost double that of Dubai, which has a default probability of only 31.3% (Chicago Mercantile Exchange data). World Bank data shows that fiscal deficit (as % of GDP) in Ukraine has more or less grown from 2.3% in 2005 to a most worrying 7% in 2009. Public debt (as % of GDP), similarly, has grown from 17.7% in 2005 to 36.7% in 2009, an extremely dangerous rise. Worse is the fact that debt service ratio (debt service payments as a ratio to export earnings) in the last four years has almost doubled, rising from 14.6 in 2005 to 27.9 in 2009. Sample Ukraine’s inflation rate for the past five years – 2005 (24.55%), 2006 (14.88%), 2007 (22.75%), 2008 (29.09%) – and you start realising the enormity of the problem facing you. As per a World Bank report released in October 2009, external debt has increased from 45.3% (of GDP) in 2005 to a gut wrenching 92.6% in 2009, more than double.
If you were to walk up the Frunzenskaya Street in Moscow right up to address number one, on a quiet wintery day you might just be able to hear the echoes of a brilliant ensemble playing somewhere around. If you tried hard, you’d realise that the sounds are coming from right behind the monolith doors engraved into the building facing you – that’s the building housing Moscow’s State Academy of Choreography, better known as the Bolshoi Ballet Academy, one of the world’s most renowned opera houses. If you were luckier, you might get to even steal an entry into a show at the Bolshoi. And better, if you were an economist, it wouldn’t have taken you a Kremlinisque second to notice the similarities that the Russian economy, and for that matter, the Ukrainian economy, have with ballet performances at the Bolshoi – with their splendiferous share of joy, sorrow, dramatics, emotional crashes, violent drama and an ending too, happy or sad depending upon which part of the official release you were fed. Today, Ukraine and Russia together have the power to break the back of the global economy. And if the world really needs an answer to which of the two could be the next Dubai, Ukraine unfortunately tops the chart.
Ukraine has the world’s highest cumulative default probability of 57.3%, almost double that of Dubai, which has a default probability of only 31.3% (Chicago Mercantile Exchange data). World Bank data shows that fiscal deficit (as % of GDP) in Ukraine has more or less grown from 2.3% in 2005 to a most worrying 7% in 2009. Public debt (as % of GDP), similarly, has grown from 17.7% in 2005 to 36.7% in 2009, an extremely dangerous rise. Worse is the fact that debt service ratio (debt service payments as a ratio to export earnings) in the last four years has almost doubled, rising from 14.6 in 2005 to 27.9 in 2009. Sample Ukraine’s inflation rate for the past five years – 2005 (24.55%), 2006 (14.88%), 2007 (22.75%), 2008 (29.09%) – and you start realising the enormity of the problem facing you. As per a World Bank report released in October 2009, external debt has increased from 45.3% (of GDP) in 2005 to a gut wrenching 92.6% in 2009, more than double.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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