Japan To Freeze Investment In Ukraine, Experts Say

KIEV, Ukraine -- The natural disasters and nuclear accidents in Japan will lead Tokyo to freeze its investment in Ukraine, experts from the Da Vinci analytical group have predicted.

Japan 2011 earthquake

"After the events of March 2011 in Japan, Tokyo will freeze investment in Ukraine, as well as in many other directions of Japanese capital expansion, for at least until the end of this year. The restoration of the domestic market will become a new priority for Japanese groups," according to a company analytical report.

As reported, Kiev city authorities on January 28, 2011 signed a memorandum on intentions with Japanese Corporation Itochu on issuing a loan to Kiev Metropoliten at a rate of 1.5% per annum for 30 years to construct subway to the Troyeschyna residential area.

Da Vinci also forecasts a decrease in imports from Japan in the first half of 2011: over half of Japanese exports to Ukraine are cars.

"Taking into account the fact that the increase in commodity turnover between Ukraine and Japan in 2010 was achieved due to 54.3% growth in imports and a slight fall of 5.7% in exports, the trade balance over 2011 could be downgraded," the report reads.

However, the experts doubt that during the period European and domestic producers would force Japanese companies from the Ukrainian market.

In addition, according to their estimates, Ukrainian companies will fail to participate in programs to restore infrastructure in Japan.

"The key factor in the assessment of consequences and the recovery of Japan's economy is preventing and overcoming accidents at nuclear power plants.

Due to this, we could downgrade the estimation of Japan's economic prospects if events at the problem nuclear power plant follow a negative scenario," the report reads.

Da Vinci AG analytical group was founded in 2002. It serves government institutions and parliamentary committees, providing analytical support for their activities.

Source: InterFax