Newsletter Issue 143 | September 2020

German FDI in Ukraine: A valuation issue

According to the Ukrainian National Statistics Office, German foreign direct investment (FDI) in Ukraine has considerably dropped since 2011. This is a remarkable development, as economic ties between the two countries have generally increased, particularly due to Ukraine’s EU association.

Indeed, the negative development in the data is caused by a few specific reasons. The data are strongly driven by one large individual investment by the German subsidiary of a global steel corporation with Indian majority shareholders. This shows that bilateral FDI statistics should be interpreted cautiously. In addition, the valuation method employed for this investment plays a key role. In sum, one should not come to rash conclusions on the relations between the Ukrainian and German economies based solely on Ukrainian FDI data.

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