Essay about Russia 's Economic Situation And Status Of The Countries

Essay about Russia 's Economic Situation And Status Of The Countries

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Corporations must be very mindful of the overall economic situation and status of the countries that they are looking to establish a foothold in. Multiple risks are associated with establishing a corporation in another country. These risks should be weighed significantly against any possible gains before taking on any of these acceptable risks. One of the ever so challenging countries to conduct business in over the recent years is Ukraine, due to the instability of their financial system, currency, and banking systems and it may not be feasible for a corporation to accept these associated risks.
Ukraine’s financial system is not advantageous to foreign businesses at this point. To keep devaluation of the Ukrainian Hryvnia (dollar) within limits, Ukraine’s central bank applied various limitations that could adversely upset foreign businesses. These methods, were intended to keep foreign currency in Ukraine, but limited the procurement of foreign currency for corporations and citizens. Foreign currency was also limited on how it could be used. According to Business Monitor International (2015) Ukraine was attempting to decrease companies obtaining foreign currency to aid in hedging currency risks.
Ukraine’s market conceivably will not recover for many years, perhaps the best way for a corporation to break away from further financial losses is accept their losses and leave without further damage to their financial pockets. With Ukraine’s instability, corporations may find it challenging to diminish any financial risks. If Ukraine were to stop the export of manufactured goods they could utilize any revenue accumulated to reimburse any owed debit to the Ukrainian banks.
With no relief in sight Ukraine’s financial syste...

... middle of paper ...

...pen arms to real in these banks, it is highly unlikely that many will be persuaded to jump in with them.
According to Business Monitor International, (2015) Ukraine’s forecasted GDP loss of 4.1% this year, investing at this point in time would be inadvisable.

Ukraine’s last five years have been horrific in terms of the economy and the have an upward battle to come back from this downslide. The depreciation of their currency has degraded the banking system, which in turn has further worsened their currency value. Constraints sanctioned by the central bank, thought to de-conflict or lessen the downfall, have put tight limitations on foreign corporations trying to conduct business with Ukraine, making it extremely difficult. Exiting sooner than later for corporations may be the right answer, mainly because the risks suggestively outweigh the rewards.

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