Ukraine's economy benefited from the global rebound, but a full-fledged recovery has yet to emerge; despite Ukraine's many weaknesses, the current outlook gives reason for cautious optimism.
IHS Global Insight Perspective
Significance: Industry output rose by 11% in 2010 to be
Ukraine's fastest-growing sector. Exports have been the key motivating force,
but domestic demand has been recovering as well. However, investment spending
and especially construction have remained weak.
Implications: Ukraine's economy has embarked on a
cautious recovery in 2010 as the political and financial situation has
stabilised. Industry has been the main driver, but many weaknesses prevail
which haunt the current outlook.
Outlook: Output results signal that GDP grew by around
4.6-4.8% in 2010 altogether. The recovery pace will slowly accelerate in 2011
and 2012, with growth peaking at 6.4% in the latter year.
Ukraine's industrial production index has increased by
11.0% in 2010 on average, according to the State Statistical Committee, thus
making good around half of the loss incurred during the crisis year 2009.
Manufacturing alone grew 13.5% at the same time. While a significant amount of
spare capacity still prevails in several sectors, industry—especially machinery
and equipment, metallurgy and chemicals which are Ukraine's key exporting
sectors—has been driving the recovery and pulling the economy out of recession.
This was largely expected, but the latest good news is that growth momentum in
Ukraine's industry has been maintained toward the end of the year.
Total industry output was up by 12.5% year-on-year (y/y)
in December, with manufacturing rising by 15.6%. The key exporting industries
have been responsible, which is remarkable given that Ukraine's heavy industry,
especially steel production, is currently struggling with rising energy costs
on the input side. However, the fact that Ukraine's export price index for
steel rose 11% in the fourth quarter, according to Kommersant Ukraine, has
surely helped steel producers to swallow higher energy prices so far.
The picture in other key sectors of Ukraine's economy is
not quite as good as in industry, but improvements in recent months have been
visible there as well. Retail sales, which had suffered in 2009 as unemployment
bounced and households sharply curtailed spending, were up by 7.8% in real
terms in 2010, and grew 14.7% y/y in December alone. This ties in with the
steady recovery of household consumption over the course of 2010, which
increased by 7.5% on the year in the third quarter, although this was from a
low base level.
The financial situation of private households has been
recovering steadily as the economy gathered traction. Despite suffering from
food price spikes and higher energy costs, real purchasing power improved as
unemployment sagged and nominal average monthly wages increased by 17.7% in
January-November, which yields a real wage gain of more than 8% on the year.
The unemployment rate went down to 7.1% in the third quarter, according to Labor
Force Survey data, after 7.9% in the second and 7.8% in the third quarter of
2009.
Investment and construction have remained the major
dampeners in 2010. In fact, construction output, which fell by 5.4% in 2010,
declined for the third year in a row, having reached only 41% of the output
level of 2007, the last year with an increase of construction output to date.
On a positive note, though, was the 3.6% y/y rise of gross fixed capital
formation in the third quarter, which signals a modest improvements in terms of
investment conditions, namely as far as the political situation and the general
macroeconomic environment is concerned. Indeed companies, particularly in
Ukraine's industry, have been cautiously expanding capacity and ramped up
capital spending as a result. However, credit-based financing of investments is
still scarce, which puts a barrier to Ukraine's investment potential in
general.
Outlook and Implications
The year 2010 has had both its disappointing and
encouraging moments. The latter were due to the political and financial
stabilisation after the chaos during the election campaign and economic crash
since late 2008, while the former moments were associated mostly with the
failure of the economy to embark on a full-fledged recovery at the same time,
which we had hoped for after the election, anticipating that a sort of
stabilisation would emerge and providing a relatively fertile ground for a
sustained recovery. The protracted crisis in the banking sector played a role,
but probably more important were the weaknesses which are deeply entrenched in
Ukraine's economy and the public sector, such as the high level of corruption,
the strong links between business and politics, which make market-based
competition hard to pursue, and the complicated tax system.
Still, there are hopeful signs as foreign direct
investment (FDI) inflows have remained fairly strong in 2010, though clearly
below pre-crisis levels, the tax code has been amended and business surveys
signal a more confident attitude in general among Ukraine's corporate sector.
Moreover, the country may look forward to co-hosting the European football
championship in 2012 together with Poland, which will still provide some
support for the ailing construction during the next several months and lift
consumption spending during the actual event. Even so, external demand will
remain the key motive power for the recovery, although imports had outstripped
exports by far in the second and third quarter.
The output results signal that GDP grew by around
4.6-4.8% in 2010 altogether, following the savage 15.1% decline in 2009. The
recovery pace will slowly accelerate in 2011 and 2012, with growth peaking at
6.4% in the latter year.
fecha |
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10/01/2011| |
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06/01/2011| |
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01/01/2011| |
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31/12/2010| |
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14/12/2010| |
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31/10/2010| |
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17/09/2010| |
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10/07/2010| |
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08/04/2010| |
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15/01/2010| |
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13/01/2010| |
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12/01/2010| |
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08/01/2010| |
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07/01/2010| |
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05/01/2010| |
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31/12/2009| |
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30/12/2009| |
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24/12/2009| |
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11/12/2009| |
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10/12/2009| |
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27/11/2009| |
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16/11/2009| |
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31/10/2009| |
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30/09/2009| |
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21/09/2009| |
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01/09/2009| |
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31/08/2009| |
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29/08/2009| |
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27/08/2009| |
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27/08/2009| |
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26/08/2009| |
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24/08/2009| |
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21/08/2009| |
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14/08/2009| |
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12/08/2009| |
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11/08/2009| |
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10/08/2009| |
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10/08/2009| |
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07/08/2009| |
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07/08/2009| |
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06/08/2009| |
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06/08/2009| |
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04/08/2009| |
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03/08/2009| |
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03/08/2009| |
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01/08/2009| |
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01/08/2009| |
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29/07/2009| |
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29/07/2009| |
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29/07/2009| |
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29/07/2009| |
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27/07/2009| |
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27/07/2009| |
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25/07/2009| |
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25/07/2009| |
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23/07/2009| |
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23/07/2009| |
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23/07/2009| |
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23/07/2009| |
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21/07/2009| |
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21/07/2009| |
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20/07/2009| |
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20/07/2009| |
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17/07/2009| |
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17/07/2009| |
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16/07/2009| |
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16/07/2009| |
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16/07/2009| |
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15/07/2009| |
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15/07/2009| |
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15/07/2009| |
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28/03/2009| |
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15/03/2009| |
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15/03/2009| |
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15/03/2009| |
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15/03/2009| |
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18/01/2009| |
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10/01/2009| |
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06/01/2009| |
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05/01/2009| |
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02/01/2009| |
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24/12/2008| |
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24/12/2008| |
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24/12/2008| |
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27/11/2008| |
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27/11/2008| |
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27/11/2008| |
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27/11/2008| |
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03/10/2008| |
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03/10/2008| |
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03/10/2008| |
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03/10/2008| |
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24/09/2008| |
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24/09/2008| |
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20/09/2008| |
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20/09/2008| |
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18/09/2008| |
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18/09/2008| |
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18/09/2008| |
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18/09/2008| |
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10/09/2008| |
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10/09/2008| |
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08/09/2008| |
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08/09/2008| |
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17/08/2008| |
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17/08/2008| |
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11/08/2008| |
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11/08/2008| |
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11/08/2008| |
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11/08/2008| |
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11/08/2008| |
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11/08/2008| |
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13/05/2008| |
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12/05/2008| |
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12/05/2008| |
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10/05/2008| |
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04/05/2008| |
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02/05/2008| |
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27/04/2008| |
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27/04/2008| |
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24/04/2008| |
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24/04/2008| |
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24/04/2008| |
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24/04/2008| |
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24/04/2008| |
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24/04/2008| |
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06/04/2008| |
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26/03/2008| |
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20/03/2008| |
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19/03/2008| |
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13/03/2008| |
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10/03/2008| |
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07/03/2008| |
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05/03/2008| |
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18/02/2008| |
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06/02/2008| |
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03/02/2008| |
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01/02/2008| |
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01/02/2008| |
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21/12/2007| |
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21/12/2007| |
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08/12/2007| |
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08/12/2007| |
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02/11/2007| |
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30/10/2007| |
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30/10/2007| |
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27/10/2007| |
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25/10/2007| |
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20/10/2007| |
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04/10/2007| |
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28/09/2007| |
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28/09/2007| |
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31/08/2007| |
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31/08/2007| |
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30/08/2007| |
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30/08/2007| |
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15/08/2007| |
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11/08/2007| |
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11/08/2007| |
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31/07/2007| |
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28/07/2007| |
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28/07/2007| |
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04/07/2007| |
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30/06/2007| |
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30/06/2007| |
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30/06/2007| |
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30/06/2007| |
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16/06/2007| |
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13/06/2007| |
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13/06/2007| |
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16/05/2007| |
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03/05/2007| |
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30/04/2007| |
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30/04/2007| |
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26/04/2007| |
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26/04/2007| |
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25/04/2007| |
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25/04/2007| |
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25/04/2007| |
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25/04/2007| |
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21/04/2007| |
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01/04/2007| |
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28/03/2007| |
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28/03/2007| |
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25/03/2007| |
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25/03/2007| |
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20/03/2007| |
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20/03/2007| |
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28/02/2007| |
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23/01/2007| |
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08/01/2007| |
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04/01/2007| |
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04/01/2007| |
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29/12/2006| |
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26/12/2006| |
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28/10/2006| |
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14/10/2006| |
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23/09/2006| |
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30/07/2006| |
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18/02/2006| |
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29/01/2006| |
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23/09/2005| |
|