Ukraine Low on 'Prices and Earnings' by UBS

More mapping — this time from UBS, Europe's second-largest bank or “the world's biggest manager of other people's money” as The Economist calls it. (Well, there’s no escaping death and taxes.)

First published in 1971, Prices and Earnings offers a gauge of what people make and what they can buy with it, in any given city.

This nuanced comparison of purchasing power around the globe is a must-read for pundits who keep tabs on the Big Mac Index, Mercer cost of living surveys, GfK purchasing power studies, etc.

So where does Kyiv rank? Not very high.

On average, it takes 82 hrs of work to buy an iPod Nano in Kyiv, compared to 10.5 hrs in Toronto, 9 hrs in New York, 36 hrs in Moscow and 45.5 hrs in Warsaw.

Sources:
http://www.ubs.com/1/e/wealthmanagement/wealth_management_research/prices_earnings.html
http://www.ubs.com/1/ShowMedia/wealthmanagement/wealth_management_research/prices_earnings?contentId=170298&name=PreiseLoehne_2009_e.pdf
http://kiyany.obozrevatel.com/news/2009/8/28/55966.htm

Ukrainian Hryvnia 49% Undervalued, According to Big Mac Index

After a two-year hiatus, The Economist has finally updated its Big Mac Index.

Since 2007, Ukraine's currency, the hryvnia, has lost 50% of its value against the dollar. The change in the hryvnia's undervaluation has been less dramatic but remains staggering: from -41% to -49%.

While not scientifically precise, this rate makes for good comparison shopping: It makes Ukraine a Third World country.

It comes on the heels of just about every other index that leaves us far behind the developed world, despite Ukraine having an aerospace industry.

And as world metal prices are picking up, it comes as terrifically good news for our energy-inefficient commodity-cursed oligarch-controlled McDonbas economy.

Ours is an economy that thrives on cheap labor and cheap natural resources. The outcome? Poor living standards. A net population loss of more than 6 million people during the last 18 years.

Why reform? Why fight corruption? Why invest in energy-efficient equipment? Why diversify the economy? Why pay Ukrainian workers decent wages if they can survive on $300 a month without protesting like those German workers who make $30 an hour?

Just pay the damn Ukrainians their slave wages. Don't let them earn enough to buy homes. Let them blow up in coal mines. Let them drink. Let them stay depressed. Let them die out so we can have the land, too. After all, unless they can make us treat them better, they deserve no better treatment. Therefore, let 5 percent of the population prosper and let the rest struggle.

Meanwhile, we the oligarchs can pollute, we can exploit and we can export. We can pump billions of dollars into offshore accounts. Hell, we can even spend a few million dollars on charity! Just keep the hryvnia undervalued. Let the Ukrainian Dream remain just that — a dream!

Sources:
http://www.economist.com/businessfinance/displaystory.cfm?story_id=14036918

Davos Meets Donbas: Bohatyryova Flashes $20K Watch

“Wearing a watch like this around here is de rigueur. Let’s not write about this subject because it’s uninteresting and mean.”

That’s what she told Serhiy Leshchenko of Ukrayinska Pravda.


Boy, did she wear that $20K Harry Winston watch at Davos!


Back in Ukraine, she likes Gucci, Louis Vuitton, and Chanel. She drives a Porsche Cayenne.

Who is she? A celebrity?


No, a civil servant!

She serves as Secretary of the National Security and Defense Council. Before accepting Yushchenko’s job offer, she used to be a Party of Regions MP and, early in her career, a gynecologist.

In Ukraine, the road from rags to riches is often paved with civil service. Indeed, civil service works miracles in Ukraine. It makes them celebrities before they know it.



It makes it de rigueur for them to consume some of the world’s most expensive brands to run Europe’s second-to-last poorest country.

Sources:
http://tabloid.pravda.com.ua/brand/4989c45877d7d
http://tabloid.pravda.com.ua/brand/471e01c9cc19e
http://www.pravda.com.ua/news/2009/2/2/88875.htm

Ukraine Ranks 64th of 104 on 2008 Legatum Prosperity Index

According to this year's study by the Legatum Institute, “Ukraine ranks amongst the lowest of the European states at 68th overall, on a par with Macedonia.” (h/t Ukrayinska Pravda)

The study ranks countries on economic competitiveness and comparable liveability, both of which contain a variety of sub-rankings.

Particularly interesting is the finding that Ukraine’s “Economic Competitiveness rank (45th) is substantially higher than its Comparative Liveability rank (91st).”

Below are some of the other excerpts from Ukraine’s country profile:

In terms of liveability, Ukraine scores very poorly on many indicators, including income. The health situation is particularly alarming: 49% of the population is dissatisfied with their personal health, and health-adjusted life expectancy is under 60 years. HIV prevalence is the highest in the region, and the population is decreasing by almost 1% annually, a trend which is amplified by massive emigration both towards the West and to Russia.

Although unemployment is relatively low, Ukraine is marked by a perceived lack of opportunity. A significant proportion of the citizens are dissatisfied with the freedom to choose what to do in life and do not believe they can get ahead by working hard, according to the Gallup World Poll.

For cross-country comparison-shopping, Legatum offers a tool called Prosperiscope™. Using this tool, you can compare:

Ukraine to the U.S.
Ukraine to Canada
Ukraine to the UK
Ukraine to Germany

Sources:
http://www.pravda.com.ua/news/2008/10/20/83090.htm
http://www.dw-world.de/dw/article/0,2144,3725069,00.html
http://www.prosperity.com/country.aspx?id=UP

Ukraine First Only to Moldova in Purchasing Power, German Study of European Countries Says

More on cabbage. Ukrayinska Pravda cites a Deutsche Welle report on a study of European purchasing power by MB Research International, the Nuremberg-based consultancy.

As expected, Ukraine lags behind most of Europe, and quite significantly so. Ukraine’s per capita disposable income stands at €1,487. It appears that this year’s study is either available in German only or on a subscription basis. However, there’s an English quote from last year’s study that sheds more light on Ukraine’s standing:

MB-Research’s newly released survey of over 1,500 European regions shows that Switzerland’s tax haven Zug and the country’s business and financial center Zurich, as well as London’s preferred residential quarter Inner London-West, are first in per capita terms with over EUR 30,000 annually. The average disposable daily income of these exceeds the monthly income in most of Ukraine, the most impoverished regions of southeast Turkey, southern Russia, Albania, in Kosovo and in Moldavia.

Western tourists who drool at the sight of all the Maybachs, Bentleys, and Jaguars cruising the streets of Kyiv will be puzzled by this report. Well, that’s the soul of stabilnist in terms of social stratification. Thanks to stabilnist, most Ukrainians are indeed “cabbage creatures,” big time.

The GfK Group, another German-based market research organization, released its GfK Purchasing Power Europe study on Nov. 13.

Interestingly enough, GfK gives the same figure — €1,487 — for Ukraine’s per capita disposable income. (Perhaps the Ukrayinska Pravda/Deutsche Welle report combined both MB Research International and GfK data.) Here's what GfK says about Ukraine in an overview of its survey:

For example, since last year purchasing power in the Ukraine [sic] has increased by approximately 26%, more than in any other country. In 2007, Ukrainians have around 300 euros more disposable income than in 2006.

Well, that’s music to Azarov’s ears, but hardly a quantum leap in Ukrainians’ pockets.