Boston, MA -- (SBWIRE) -- 04/30/2014 -- Our tourism report for Ukraine examines a wide range of key market indicators in order to establish both short- and long-term trends in inbound and outbound travel, development of the hotel sector, and the overall industry value. The ongoing domestic political unrest, as well as regional tensions with Russia regarding the future of Crimea, will obviously impact heavily on tourism, though as of the time of writing it is unclear exactly to what extent the market will be affected.
Domestic tensions in the Ukraine escalated in late 2013 and early 2014, leading to violent clashes in the capital city of Kiev and the eventual ousting of President Victor Yanukovych. An interim government has been established, with elections set to be held on May 25. The crisis entered a new phase when Russian troops moved into Crimea, a semi-autonomous region in the south of Ukraine with strong ties to Russia, which subsequently announced a referendum on the issue of whether the region should belong to the Russian Federation or remain part of Ukraine.
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While the de facto invasion of Crimea by Russian troops has substantially heightened the risk of a military conflict between Ukraine and Russia, we stress this is not our core scenario. That said, recent developments are likely to dissuade all but the most risk-tolerant investors, and foreign direct investment is likely to slow to a crawl in 2014. Even excluding the prospect of a protracted military intervention from Russia for the moment, the country is at severe risk of an uncontrolled devaluation of the hryvnia and consequent economic collapse. As such, we expect GDP to contract in 2014.
Taking all these factors into account, we expect to substantially revise our projections for the Ukrainian tourism market in future reports; however, until the situation has stabilised and some clarity is established as to what extent Russia, or indeed the EU/NATO, will intervene, it is difficult to accurately adjust our forecasts. As such, for this quarter we are maintaining previous forecasts; however, it is important to note these will be altered significantly, at least for the short term, in the near future.
Prior to the unrest, the picture was looking very positive for the Ukrainian tourism market. Inbound arrivals received a substantial boost in 2012 when the country co-hosted with Poland the UEFA European Championship. This high-profile event raised the country's reputation and led to a range of improvements in both transport and accommodation infrastructure, which was much needed after years of neglect. Based on these developments, we expect that inbound arrivals could reach 31.6mn in 2018.
Likewise, we had also expected to see growth in the country's outbound travel market, which we were forecasting would reach 8.6mn in 2018 based on slow but steady gains in the domestic economy as well as improved regional travel connections.
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