The initiative by Ukrzaliznytsia to raise freight transport tariffs by 37% could have serious consequences for Ukraine’s economy. Analysts from the state enterprise Ukrpromzovnishexpertise have calculated that this will lead to a decrease in gross domestic product (GDP) by 1.18%, which is equivalent to approximately ₴95.8 billion. Additionally, a nearly 3% decline in exports, or ₴97.8 billion, is forecasted.
This is reported by Finway
Consequences of Tariff Increases
Specifically, if the tariff is raised by 37%, the cost of railway freight transport for various types of products will increase by 26-31%. This will also lead to a reduction in transport volumes by 27 million tons per year and a decrease in production by 23 million tons of various products.
Impact on Different Sectors of the Economy
Among the most affected sectors of the economy are metal ore extraction, where production volumes are expected to decline by -5.38% (about -₴30.8 billion), as well as metallurgy, with a decline of -6.9% (about -₴63.6 billion). Significant losses are also anticipated in the trade sector (-0.96%, or -₴21.5 billion) and transportation (-1.02%, or -₴10 billion).
“As a result of the increase in railway tariffs, Ukrainian producers are shifting to road transport; however, for the majority of products, the railway is irreplaceable, or its substitutability is limited.”