Tuesday, May 18, 2010

Wishful thinking?

Kyiv Post. Independence. Community. Trust - Ukraine - Medvedev: Russia, Ukraine need annual trade volume of $100 billion: "Medvedev: Russia, Ukraine need annual trade volume of $100 billion"

Here is the figure of actual bilateral trade in 2001-2009, plus projection for 2010 of 40 bln US$ that both presidents expressed as realistical target, plus what Medvedev called as a long term goal of 100 bln US$ for the future (I defined the future as 2020 at my own discretion).


If one believes that both economies will come back to the trend they had before 2009, the 100 bln US$ in 2020 looks feasible. However, I do believe that Russia and Ukraine are on another long term equilibrium path now, and I bet that the level of bilateral trade of 2008 (35 bln US$ ) will not be reached neither this year nor in 2011. Speaking about the long run goal, 100 bln US$ is possible, but meaningless goal. If, as some economist warn us, we entering a phase with high inflation, value of 100 bln US$ can be reached pretty quickly but the volume of trade will not grow 5 times in foreseeable future. 

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