Conflict with Russia has had repercussions on the Ukrainian economy, negatively impacting trade with the European Union. Commercial contact with Italy has rapidly slowed down, especially in connection to Italian manufacturing industries, such as the furniture industry.
Ukrainian GDP fell in 2015 and 2016, with wealth loss of 6.8% and 11% respectively, compounded by soaring inflation (+45% in 2015). However, 2016 saw the beginning of a recovery. In 2016, GDP grew by 1.5% and the International Monetary Fund expects a further rise of 2.5% in 2017.
The free trade agreement in place since 1 January 2016 is designed to promote economic relations between the EU and Ukraine. Since that date, Ukraine has not applied any duty on the 70.9% of goods that come from the EU. Kiev is already beginning to make a resurgence, although it is difficult to predict how substantial this will be and which sectors will recover first.
Furniture is one of the most dynamic industries, at least potentially, as demonstrated by the many trade fairs organized in Ukraine, which have a strong attendance from Italian companies, the leading furniture exporters to Ukraine. In spite of the difficult political and economic period, Ukraine’s own design industry has been enlivened by local professionals: the quality and creativity of Ukrainian projects is growing and becoming increasingly comparable to that of the EU, which is helping to overcome the country’s image as an entirely commodity-based economy.
There is still a large gap, but young Ukrainian furniture companies are trying to enter the EU market, presenting their own essential style, with the advantage of very competitive prices. They are achieving their best results in Germany, in part due to German consumers’ openness towards foreign products, including from “new” countries: they take the pragmatic view that quality/price ratio is more important than where products are made.
Ιt is much more difficult to compete with Italian brands, but the Ukrainian furniture industry is focusing above all on affordable logistics, low production costs and Ukrainian materials. Ukraine is therefore positioned for further integration in the European wood furniture production chain over the coming years, both as a destination for high-level design products and as an exporter of “mass-consumption” furniture, thanks to the good quality and low prices of its products.