Экономические науки/ 6.Маркетинг и менеджмент.

Mihailenko T.

Vlasova I. A.

Donetsk state university of economics and trade

after Michael Tugan-Baranovsky, Ukraine

GROSS DOMESTIC PRODUCT

Economic indices of 2006 demonstrate positive dynamics of the state development and certify certain adaptation of business entities to new conditions. Gross added value augmented by 7% if compared with 2005 (last year index amounted to 2.7%). This process took place in all spheres of Ukraine's economy, notedly in trade, transportation, and construction, on the background of abrupt increase of labor intensity and production intensification.

Majority of experts were careful in assessing the outlooks of Ukraine economy last year. Meanwhile, increase of prices for energy carriers by and large did not prevent development of economy real sector. Improvement of situation with foreign and investment demand allowed Ukrainian producers to adjust to new expense level without significant losses. If the most power intensive kinds of economic activities curtailed production volumes in the beginning of 2006, then starting from the second half of the year metallurgy and machine building industries became locomotives of industrial production growth.

According to the words of Martin Rizer, leading economist of the World Bank, such result in conditions of price growth for imported gas proves strength of industrial sector, its liquidity, profit, motivation and adjustment to changing prices for energy carriers. In turn, it shifts business to modernizing of production and reduction of power generating resources' consumption. The fact that prices for metal increased on foreign markets rather than dropped is another growth determinant. Ukrainian consumers spent more resources for consumption, that encourages growth of economy in the result.

Industry, trade, and transportation are priority sectors in Ukraine. Acceleration of industry growth was secured to a great extent by growth of production in metallurgy, machine building, food industry, and electric power generating. By the way, growth cumulative trend became positive. Volumes of industrial output expanded in December 2006 both against the previous month (by 2.2%) and versus December 2005 (by 12%). Accretion of production in industry amounted to 6.2% according to the results of the year, thus doubling the indices of 2005. Metallurgy and metal working, as well as machine building had a determinant influence over improvement of industrial output dynamics.

Growth of production volumes were noted in all main kinds of activities except for coke production, output of oil refinery products, and light industry articles, including by 5.8% in mining industry (by 4.4% in 2005), by 6.3% in processing industry (3%), and by 6.9% in the companies generating and distributing electric energy, gas, and water (2.9%).

The number of profitable companies of the industry made 59.4% over January-November 2006 (60.4% over the corresponding period of 2005).

Growth of output in chemical and petrochemical industries took place due to increase of prices for fertilizers on the world market. In the beginning of the year the industry suffered certain losses because of gas price augmentation. Production volumes in the industry increased by 3.2% (by 9.8% in 2005).

Output in chemical industry increased by 0.9%, including by 1.7% in production of base output, by 6.5% in pharmaceutical production, and by 3.1% in production of soap, perfumes, cleaning, and polishing agents. Output of rubber and plastic articles correspondingly augmented by 0.8 and 15.8%. Meanwhile, production of paints and varnishes diminished by 14.6%, while output of artificial and synthetic fiber decreased by 6.8%. The number of profitable companies in the industry amounted to 64.9% (69.4% in January-November 2005).

Growth of food industry and processing of agricultural produce took place at the account of growing domestic demand fostered by higher minimal wages, minimal retirement pension, and other social donations, major portion of which was spent for purchasing foodstuffs. Households occupy 22% in the pattern of food industry output use, therefore encouraging of domestic demand significantly influences development of the industry. At the same time, essential accretion is connected with increase of oil and sugar production thanks to good harvest of sunflower and sugar beet. Also growth of pork and poultry production contributed to the growth of the industry (supplies of meat and milk group output to Russian Federation were partially renewed in the end of 2006).

Situation on the local market significantly impaired after amending the Law of Ukraine "On customs tariff", when import duties for shoes, textile, and other light industry articles were curtailed For example, import of male shirts augmented 10.6 times (it exceeds output 6 times), and male suits - 6.8 times (exceeds production 15 times). Local producers do not sustain competition and as a result demand for their output diminishes.

Ukraine ranked the first in 2006 by accretion of direct foreign investments and the second by volumes of drawn direct foreign investments among the states of Southern and Eastern Europe. Pursuant to UNCTAD (UN Conference on Trade and Development) report "Direct foreign investments to developing states and economies in transition - expected effect from development", only Russia left Ukraine behind by volume of direct foreign investing in the region. However, it should be taken into account that Russian economy is much larger than Ukrainian one. Experts think that Ukraine's success is a result of reforms and improvement of investment climate. "We are optimistic about development of situation in Ukraine. These are more than just words. Ukraine possesses great capacities for business development. Therefore we are sure that economy should advance in high rates", Dr. Edilberto Segura, representative of Sigma-Bleyzer company, stressed during the meeting of European Parliament Delegation on ties with Ukraine in Brussels. He noted herewith that acceleration of Ukrainian economic growth and its economic stability would to a great extent depend on ability of the new government to continue reforms and to essentially improve conditions of doing business in the state.