Trisha Shetty (Editor)

Economy of Ukraine

Updated on
Share on FacebookTweet on TwitterShare on LinkedInShare on Reddit
Covid-19
Fiscal year  Calendar year
GDP rank  44th (PPP)
Population below poverty line  24.3% (2015)
GDP per capita  3,900.47 USD (2013)
GDP growth rate  1.9% annual change (2013)
Trade organizations  GUAM and WTO
Inflation (CPI)  13.9% (CPI, 2016)
Currency  Ukrainian hryvnia
Gross domestic product  177.4 billion USD (2013)
GNI per capita  8,970 PPP dollars (2013)
Economy of Ukraine httpsuploadwikimediaorgwikipediacommonsthu
GDP by sector  agriculture 9.9%, industry 29.6%, services 60.5% (2013 est.)
Internet users  41.8% of the population (2013)
Gross national income  407.8 billion PPP dollars (2013)

The economy of Ukraine is an emerging free market. Like other post-Soviet states, its gross domestic product fell sharply for 10 years following the collapse the Soviet Union in 1991. However, it grew rapidly from 2000 until 2008 when the Great Recession began worldwide and reached Ukraine as the 2008-2009 Ukrainian financial crisis. The economy recovered in 2010, but since 2013 the Ukrainian economy has been suffering from a severe downturn.

Contents

Map of Ukraine

The depression during the 1990s included hyperinflation and a fall in economic output to less than half of the GDP of the preceding Ukrainian SSR. GDP growth was recorded for the first time in 2000, and continued for eight years. This growth was halted by the global financial crisis of 2008, but the Ukrainian economy recovered and achieved positive GDP growth in the first quarter of 2010. By October 2013, the Ukrainian economy lapsed into another recession. The previous summer Ukrainian export to Russia was substantially worsened due to stricter border and customs control by Russia. The early 2014 annexation of Crimea by Russia, and the War in Donbass that started in the spring of 2014 severely damaged Ukraine's economy and severely damaged two of the more industrial oblasts. In 2013, Ukraine saw zero growth in GDP. Ukraine's economy shrank by 6.8% in 2014, and this continued with a 12% decline in GDP in 2015. In January 2016 the World Bank expected Ukraine to experience an economic growth rate of 1% in 2016, which if true will end the recession.

History

The nation has many of the components of a major European economy - rich farmlands, a well-developed industrial base, highly trained labour, and a good education system. At present, however, the economy remains in poor condition. It is still smaller than it was in 1992.

1991 to 2000

On 24 August 1991 Ukraine established its independence from the Soviet Union. Its economy suffered huge output declines and soaring inflation the following years. Ukraine also saw hyperinflation in the early 1990s because of a lack of access to financial markets and massive monetary expansion to finance government spending while there was a sharply declining output. Huge output declines and soaring inflation was at the time common to most former Soviet republics; but Ukraine was among the hardest hit by these problems. In response to (this) hyperinflation the National Bank of Ukraine replaced the old currency, the karbovanets, with the hryvnia in September 1996 and pledged to keep it stable in relation to the US dollar. The currency continued to be unstable through the late 1990s, particularly amid the 1998 Russian financial crisis.

Deep recession during the 1990s led to a relatively high poverty rate, but beginning in 2001, as a result seven of straight years of economic growth, the standard of living for most citizens increased. World Bank report, 2007 notes: "Ukraine recorded one of the sharpest declines in poverty of any transition economy in recent years. The poverty rate, measured against an absolute poverty line, fell from a high of 32% in 2001 to 8% in 2005. The UN noted that absolute poverty in Ukraine already was overcome, and that there was only relative poverty in 2009.

2000 to 2014

Ukraine stabilised by the early 2000s. The year 2000 was the first year of economic growth (since (Ukraine's) independence). The economy continued to grow thanks to a 50% growth of exports from 2000 till 2008. Mainly exports from the traditional industries of metals, metallurgy, engineering, chemicals, and food. Between 2001 and 2008 metals and chemicals prices boomed because of fast international economic growth while the price of natural gas imported from Russia remained low. Monetization also helped to drive the economic boom Ukraine experienced between 2000 and 2008. Attracted in part by relatively high interest rates foreign cash was injected in Ukraine's economy and money supply grew rapidly: from 2001 to 2010 broad money increased at an annual rate of 35%. In 2006 and 2007 credit growth averaged 73%. An effect of this was that Ukrainian assets began to look like a large economic bubble and high inflation started to damaged Ukraine's export competitiveness. The ratio of credit to GDP grew extremely fast—from 7 to almost 80 percent over just several years. From 2000 to 2007, Ukraine’s real growth averaged 7.4%. This growth was driven by domestic demand: orientation toward consumption, other structural change, and financial development. Domestic demand grew in constant prices by almost 15% annually. It was supported by expansionary—procyclical—fiscal policy. Ukraine benefited from very low labor costs, slightly lower tariffs, and high prices of its main export goods, but at the same time faced notably higher non-tariff barriers. Russia does not charge Ukraine below world market prices for natural gas since the end of 2008; this led to various Russia–Ukraine gas disputes.

Ukraine was greatly affected by the economic crisis of 2008; because of it Ukraine suffered from a drought in capital flows. The hryvnia, which had been pegged at a rate of 5:1 to the U.S. dollar, was devalued to 8:1, and was stabilized at that ratio till beginning of 2014. In 2008, Ukraine's economy was ranked 45th in the world according to 2008 GDP (nominal) with the total nominal GDP of 188 billion USD, and nominal per capita GDP of 3,900 USD. There was 3% unemployment at the end of 2008; over the first 9 months of 2009, unemployment averaged 9.4%. The final official unemployment rates over 2009 and 2010 where 8.8% and 8,4%. Although the CIA World Factbook notes a "large number of unregistered or underemployed workers". Ukraine's GDP fell by 15% in 2009.

The Ukrainian economy recovered in the first quarter of 2010. Due to the recovery of the world economy and increasing prices for metals. Ukraine's real GDP growth in 2010 was 4.3%, leading to per capita PPP GDP of 6,700 USD. In 2011 Ukrainian politicians estimated that 40% of the country's economy is shadow economy.

In the summer of 2013 Ukrainian export to Russia by was substantially worsened by stricter border custom control by Russia.

By October 2013 the Ukrainian economy became stuck in recession. Moody's put Ukraine's credit rating to Caa1 (poor quality and very high credit risk) in September 2013. At the time swap markets rated Ukraine's default probability over the next five years at 50 percent. In 2013, Ukraine saw zero growth in GDP.

2014 to present day

Due to the loss of its largest trading partner, Russia, over the annexation of Crimea, and exacerbated by the War in Donbass Ukraine's economy shrank by 6.8% in 2014; it had been expected to decline by 8%. The early 2014 annexation of Crimea by Russia also contributed to this shrinkage. A Ukrainian Government report stated early February 2016 that Ukraine's economy had shrunk by 10.4% in 2015. For 2015 a further decline of 11.6% had been expected by the National Bank of Ukraine and a 12% shrinkage according to the World Bank. The World Bank forecast a growth of 1% in 2016.

Early February 2014 the National Bank of Ukraine changed the hryvnia into a fluctuating/floating currency in an attempt to meet IMF requirements and to try to enforce a stable price for the currency in the Forex market. In 2014 and 2015 the hryvnia lost about 70% of its value against the U.S. dollar.

An IMF four-year loan program worth about $17.5 billion was agreed in eight tranches over 2015 and 2016, subject to conditions regarding economic reforms. However, due to lack of progress on reforms, only two tranches worth $6.7 billion were paid in 2015. A third tranche of $1.7 billion may be paid in June 2016 subject to the bringing into law of 19 further reform measures. Some western analysts believe that large foreign loans are not encouraging reform, but enabling the corrupt extraction of funds out of the country.

Since December 2015 Ukraine refuses to and hence de facto defaults a $3 billion debt payment to Russia that was part of a December 2013 Ukrainian–Russian action plan.

The turnover of retail trade in Ukraine in 2014 shrank by 8.6% (from 2013) and shrank by 20.7% in 2015 (from 2014). Ukraine saw a 30.9% decline in exports in 2015. Mainly because of a sharp decline in production output in Donetsk Oblast and Luhansk Oblast (the two regions of Donbass). These two regions were responsible for 40.6% of the total export decline rate. Before the war they had been two of the more industrial oblasts of Ukraine. According to the Ministry of Economic Development and Trade Ukraine had a surplus of the balance of payments in January–November 2015 of $566 million and have had a trade deficit of $11.046 billion during the same period in 2014. On 31 December 2015 Ukraine's public debt was at 79% of its GDP. It had shrank $4.324 billion in 2015 to end up at $65.488 billion. But calculated in hryvnia the debt had grown 42.78%. In 2015 the Ministry of Social Policy of Ukraine rated 20-25% of Ukrainian households as poor.

$2.526 billion were sent into the Ukrainian economy using remittances in 2015, 34.9% less than in 2014. $431 million was sent from Ukraine to elsewhere using remittance. In January 2016, the US company Bloomberg rated Ukraine's economy as the 41th most innovative in the world, down from 33d in January 2015.

In May 2016, the IMF mission chief for Ukraine Ron van Rood stated that the reduction of corruption was a key test for continued international support. In 2015 Transparency International ranked Ukraine 130th out of 168 countries in its Corruption Perceptions Index. In February, historian Andrew Wilson assessed that as of 2016 progress in reducing corruption was poor. Aivaras Abromavicius, Ukraine's then Minister of Economy and Trade resigned in February 2016 citing ingrained corruption. In October at a conference for foreign investors, corruption and lack of trust in the judiciary were identified as the largest obstacles to investment.

Late in July 2016, the State Statistics Service of Ukraine reported that, compared with June 2015, real wages had increased by 17.3%. Simultaneously the National Bank of Ukraine reported a $406 million surplus in Ukraine's January–June 2016 balance of payments against a deficit of $1.3 billion in the same period in 2015. According to (Ukraine's) State Statistics Service inflation in 2016 came down to 13.9%; while it was 43.3% in 2015 and 24.9% in 2014.

The Economist has compared the severity of Ukraine's recession to that of the Greek recession in 2011-2012. Pointing to Ukraine experiencing a 8-9% decline in GDP from 2014-2015 and Greece experiencing a 8.1% decline of GDP in 2011-2012. It was also noted that not all areas of Ukraine were equally effected by the economic downturn. Donetsk and Luhansk being located at the epicenter of the conflict zone each saw industrial production falling by 32% and 42% respectively. On the other hand, Lviv, located over 1000 km from the conflict, posted the largest jump in employment in the nation.

Economic Data - Statistical Information

Ukraine is subdivided into nine economic regions: Carpathian, Northwestern, Podillia, Capital, Central-Ukrainian, Northeastern, Black-Sea-Coastal, Trans-Dnipro, and Donetsk. Those regions were redrawn from the three Soviet economic regions of the Ukrainian SSR: Donetsk-TransDnieper, Southwestern, and Southern.

Trade

Until recently, Russia was Ukraine's largest trading partner with 25.7% of exports and 32.4% of imports in 2012. In 2012, 24.9% of exports and 30.9% of imports were to and from the EU. In 2013, 35.9% of Ukrainian exports went to CIS countries, including eight countries other than Ukraine. Simultaneously, exports to EU countries, of which there are twenty-eight, was 26.6%. By 2015 the EU became Ukraine's largest trading partner, accounting for more than a third of its trade. In 2015 the Ukrainian export to Russia figure had fallen to 12.7%. In 2014 Ukraine imported 23.3% of all its imports from Russia.

In 2015, food and other agricultural products (worth $13 billion), metallurgy ($8.8 billion) and machinery ($4.1 billion) made up most of the Ukraine's exports with trade partners from 217 countries. Exports from Ukraine in 2015 decreased by 29.3% to $38.135 billion and imports were 31.1% down, to $37.502 billion.

Natural gas is Ukraine’s biggest import and the main cause of the country’s structural trade deficit.

Ukraine's "business climate" has a very negative reputation.

Natural resources

Ukraine is relatively rich in natural resources, particularly in mineral deposits. Although oil and natural gas reserves in the country are largely exhausted, it has other important energy sources, such as coal, hydroelectricity and nuclear fuel raw materials.

Industries

In Ukraine covering about 20 major industries, namely power generating, fuel, ferrous and non-ferrous metallurgy, chemical and petrochemical and gas, machine-building and metal-working, forest, wood-working and wood pulp and paper, construction materials, light, food and others. Industry accounted for 26% of GDP in 2012. The country possesses a massive high-tech industrial base, including electronics, arms industry and space program.

Mining and production

Ukraine is one of the world's most important mineral producing countries, in terms of both the range and size of its reserves. There are nearly 8,000 separate deposits, harboring some 90 different minerals, of which about 20 are economically significant. About half of all the known deposits are under exploitation. Coal reserves in Ukraine amount to 47.1 billion tons. The annual domestic demand for coal as fuel is about 100 million tons, of which 85 percent can be satisfied by domestic production. Ukraine has oil and gas fields that meet 10 percent of her oil and 20 percent of her gas consumption, respectively. Ukraine contains natural gas reserves of 39.6 trillion cubic feet, but only about 20 percent of the country's demand is met by domestic production. Deposits of iron ore (estimated at 28 billion tons), manganese ore (3 billion tons), chalk and limestone (1.5 billion tons) are also large in Ukraine. The domestic industrial sector suffers from constant energy shortages and energy supply payment debts totaling about $792 million at the end of 1995.

Iron and steel

Ukraine is rich in mineral deposits, including iron ore (of which it once produced 50 percent of the entire Soviet output), manganese ore (of which it produced 40 percent of world output during the Soviet era), mercury, titanium, and nickel.

Ukraine has a major ferrous metal industry, producing cast iron, steel and pipes. Among its economy leading companies in that field are Metinvest, Kryvorizhstal, AzovStal, Ilyich Steel & Iron Works, and others. As of 2012, Ukraine is the world's tenth largest steel producer (according to World Steel Association).

Chemical industry

Another important branch is the country's chemical industry which includes the production of coke, mineral fertilizers and sulfuric acid.

Strategic and defense complex

Ukraine's defense industry is organized around Ukroboronprom, a state owned conglomerate of over 130 companies. These companies include Soviet era giants such as Ivchenko-Progress aircraft design bureau that was opened in 1945, to newer companies such as RPC Fort which came into existence in the 1990s. Ukraine is also among the top 10 arms exporters in the world. The signing of recent large contracts may put Ukraine into 6th place among biggest arms traders, after the United States, Russian Federation, France, Germany and Israel. The output of Ukrainian defense plants grew 58% in 2009, with largest growth reported by aircraft builders (77%) and ship builders (71%).

In 2013 Ukraine's defense sector manufactured a total of 11.7 billion UAH worth of goods, 10 billion UAH of which were exported. In the first 9 months of 2014 Ukraine's defense sector produced a record 13 billion UAH worth of goods, the increase was largely due to government orders for the War in Donbass.

Fuel and energy complex

Fuel industry

Ukraine imports 90% of its oil and most of its natural gas. Russia ranks as Ukraine's principal supplier of oil, and Russian firms own and/or operate the majority of Ukraine's refining capacity. Natural gas imports come from Russia - which delivers its own gas, as well as the gas from Turkmenistan. Ukraine transports Russian gas to the EU through its well-developed gas pipelines system, being Europe's vitally important connection. The country's dependence on Russian gas supplies dramatically affects its economics and foreign policy, especially after the 2014 Russia–Ukraine gas disputes.

However, Ukraine is independent in its electricity supply, and exports to Russia and other countries of Eastern Europe. This is achieved through a wide use of nuclear power and hydroelectricity. Recent energy strategy intends gradual decreasing of gas- and oil-based generation in favor of nuclear power, as well as energy saving measures including lower industrial gas consumption. Reform of the still inefficient and opaque energy sector is a major objective of the International Monetary Fund (IMF) and World Bank programs with Ukraine.

Ukraine is a partner country of the EU INOGATE energy programme, which has four key topics: enhancing energy security, convergence of member state energy markets on the basis of EU internal energy market principles, supporting sustainable energy development, and attracting investment for energy projects of common and regional interest.

Automotive industry

Ukraine automobile manufacturers produces diesel locomotives, tractors, trucks, buses, trolleybuses, own-designed cars and trams. There are 12 automobile manufacturers in Ukraine includes ZAZ, LuAZ, Bogdan, KrAZ, Eurocar, Electron, LAZ.

ZAZ (Zaporizhia Automobile Building Plant) is the main automobile-manufacturer of Ukraine, based in the south-eastern city of Zaporizhia. Beginning of passenger cars manufacturing in Ukraine started in 1959. From 1960 to 1994, a total of 3,422,444 Zaporozhets vehicles were manufactured in Zaporizhia and engines with air-cooling in Melitopol. In 2011-2012, Zaporizhia Automobile Building Plant started serial full-scale production of two new models of vehicle, the ZAZ Forza and the ZAZ Vida.

Bogdan Corporation is a leading Ukrainian automobile-manufacturing group, including several car- and bus-makers of the country. Bogdan buses are used as the primary small buses in most Ukrainian cities.

LAZ is one of the major bus manufacturers in Ukraine. It manufactures city buses, coach buses, trolley buses, and special purpose buses.

The Lviv-based company Electrontrans is an enterprise of a full-scale production, specializing in design and production of modern urban electric transport – trams, trolleybuses, electric buses, units and spare parts. In 2013 Electrotrans starts producing low-floor trams, the first Ukrainian 100% low-floor tramways.

Aircraft and aerospace industry

Ukraine is one of nine countries with a full cycle of aerospace hardware engineering and production. Besides to design and production of passenger and transportation aircraft, Ukraine also boasts a network of aircraft repair enterprises, including companies involved in recovery of military planes and helicopters. In March 2007, the Cabinet of Ministers of Ukraine created State aircraft building concern «Aviation of Ukraine» (SACAU), which is governed by the Ministry of industrial policy. Production of An-148 aircraft is now one of the most prospective projects for Ukrainian plane manufacturing industry with 35 units manufactured since 2009 (together with Russian production). The aircraft were engineered by Antonov Scientific and Production Complex Design Office (Antonov ANTK). The largest single airplane in the world, Antonov An-225 Mriya was also designed by Antonov ANTK and made in 1988. Gross production of light and ultra light planes in Ukraine does not exceed 200 units per annum. Production of hang-gliders and paragliders of all designs makes nearly 1,000 units each year. Most of produced devices are exported (the buyers of Ukrainian-made ultra light aircraft are the United States, Australia, New Zealand, the United Kingdom, France, etc.).

Since the Ukrainian crisis, aerospace industry revenues have fallen by 80%. In June 2016, the Antonov Corporation merged with the state-owned military conglomerate UkrOboronProm, forming Ukrainian Aircraft Corporation within its structure. This merger was done in order to boost Antonov profits and the production rate. Currently, Antonov is working on two cargo planes: An-178, a cargo version of An-158, and An-132D, a redesigned version of An-32. The An-132 is developed jointly with Saudi's Taqnia Aeronautics Company, featuring western avionics and engines. The roll out and first flight is due at the beginning of January 2017.

The space rocket industry in Ukraine has been managed by the National Space Agency of Ukraine since 1992. The agency includes 30 enterprises, scientific research institutes, and design offices. Pivdenne Design Bureau is in general responsible for creating the Zenit-3SL carrier rocket. The National Space Agency of Ukraine is involved in cooperation with American Rockwell Int., as well as the Sea Launch project. The first stage core of the U.S. Orbital ATK Antares rocket was designed and is manufactured in Ukraine by Yuzhnoye SDO.

Shipbuilding

The USSR’s collapse put Ukraine’s shipbuilding into a long-term decline. It lasted until 1999 and was mostly due to a minimum volume of state shipbuilding orders. In general, between 1992 till 2003, the 11 shipyards of the country produced 237 navigation units for a total value of USD 1.5 billion. Production facilities are not working near full capacity, and customers are not always timely in paying for services. Growth of production volumes was witnessed at the enterprises of shipbuilding industry over 2000-2006. State support and the opening of free economic zones, foremost at enterprises based in Mykolaiv were of crucial recent developments in Ukraine's shipbuilding industry. Within the Mykolaiv Special Economic Zone, enterprises like Damen Shipyards Okean, Chornomorskyi (Black Sea) Shipbuilding Plant, 61 Communards Shipbuilding Plant, as well as the Veselka (Rainbow) paint and insulation enterprise are implementing investment projects targeted to raise efficiency and quality in primarily export-oriented vessel building through production upgrades. The new engineering developments and high potential of Ukrainian designers give ability to build high quality vessels with competitive prices. There are 49 shipbuilding companies registered in Ukraine. They are able to build a wide range of vessel types: powerboats, barges, bulk carriers (dry cargo ship), tankers, liquefied gas carriers, etc. Ukraine is one of the 10 largest shipbuilding countries in Europe.

Agriculture

Although typically known as the industrial base of the Soviet Union agriculture is a large part of Ukraine's economy. In 2008 the sector accounted for 8.29% of the country's GDP and by 2012 has grown to 10.43% of the GDP. Agriculture accounted for $13.98 billion value added to the economy of Ukraine in 2012, however despite being a top 10 world producer of several crops such as wheat and corn Ukraine still only ranks 24 out of 112 nations measured in terms of overall agricultural production. Ukraine is the world's largest producer of sunflower oil, a major global producer of grain and sugar, and future global player on meat and dairy markets. It is also one of the largest producers of nuts. Ukraine also produces more natural honey than any other European country and is one of the world's largest honey producers, an estimated 1.5% of its population is involved in honey production, therefore Ukraine has the highest honey per capita production rate in the world. Because Ukraine possesses 30% of the world's richest black soil, its agricultural industry has a huge potential. However, farmland remains the only major asset in Ukraine that is not privatized. The agricultural industry in Ukraine is already highly profitable, with 40-60% profits, but according to analysts its outputs could still rise up to fourfold.

Ukraine is the world's 6th largest, 5th if not including the EU as a separate state, producer of corn in the world and the 3rd largest corn exporter in the world. In 2012 Ukraine signed a contract with China, the world's largest importer of corn, to supply China with 3 million tonnes of corn annually at market price, the deal also included a $3 billion line of credit extension from China to Ukraine.

In 2014 Ukraine total grain crop was estimated to be record 64 million metric tons. However, in 2014 several regions have declared (themselves) independence (and are no longer under control of Ukrainian central authorities) resulting in the War in Donbass and the Crimea Crisis, hence the actual available crop yield was closer to 60.5 million metric tons. By October Ukrainian grain exports reached 11 million metric tons. Due to the decline of the metallurgy industry, Ukraine's top export in prior years, as a result of the War in Donbass agricultural products accounted for the nation's largest exported set of goods.

Information technology

Ukraine has a long-standing reputation as a major technology region, with a well-developed scientific and educational base. In March 2013 Ukraine ranks fourth in the world in number of certified IT professionals after the United States, India and Russia. On top of that, the experts recognize both quantitative and qualitative potential of the Ukrainian specialists. In 2011 the number of IT specialists working in the industry reached 25,000 people with 20% growth. The volume of the Ukrainian IT market in 2013 was estimated to be up to 3.6 billion US dollars.

Maritime

About 100,000 Ukrainians regularly work on foreign merchant ships, one of the largest group of Ukrainian labor migrants and the sixth largest number of sailors from any country. They are attracted by the relatively high salaries of more than $1,000 per month.

Every major Ukrainian coastal city has a maritime university.

Communications

Ukraine ranks eighth among the world’s nations in terms of the Internet speed with the average download speed of 1,190 kbit/s. Five national providers of fixed (DSL, ADSL, XDSL) internet access — Ukrtelecom, Vega Telecom, Datagroup, Ukrnet, Volia, and 5 national operators of mobile internet — MTS, Kyivstar, PEOPLEnet, Utel, and Intertelecom are currently operating in Ukraine. Every regional center and large district center has a number of local providers and home networks.

2011 revenues from Internet service providing in Ukraine reached ₴ 4.75 bn

Almost 20 million Ukrainians had Internet access in December 2012. In Kiev 90% of the population had internet access. The number of Internet users in Ukraine was expected to nearly double by 2015.

The mobile-cellular telephone system's expansion has slowed, largely due to saturation of the market which has reached 125 mobile phones per 100 people.

Tourism

Ukraine is the 8th most popular tourism destination in Europe with 23 million visitors in 2012. The country's tourism industry is generally considered to be underdeveloped, but it does provide crucial support for Ukraine's economy. In 2012, the contribution of tourism to the GDP amounted to 28.8 billion ₴, or 2.2% of GDP and directly supported 351,500 jobs (1.7% of total employment).

Shopping tourism

Ukraine's neighbours (Poles, Slovaks, Hungarians, Belarusians and even Russians) are known to come to Ukraine to purchase products and presents, such as food or gasoline, that are cheaper in Ukraine than in their home countries.

Recreational tourism and sightseeing

Ukraine has impressive landscapes, ruins of ancient castles, historical parks, vineyards where they produce native wines, unique structures such as Saint Sophia Cathedral or Chersonesos. Officially, there are seven World Heritage Sites in Ukraine. The Carpathian Mountains suitable for skiing, hiking, fishing and hunting. Bukovel — is the largest ski resort in Ukraine situated in the Ivano-Frankivsk Oblast (province) of western Ukraine. The 2010-2011 winter season recorded 1,200,000 day visits with foreigners amounting to 8-10% of all visitors. In 2012 the Bukovel was named the fastest growing ski resort worldwide. The coastline on the Black Sea is a popular summer destination for vacationers, especially Odessa.

Investments

A political crisis in the middle of 2006 was feared as a threat to economic and investment stability, however, despite the forecasts, the political situation has not scared investors. The GDP showed a good growth rate of 7% in 2007, compared to the previous year. Industrial output has increased. Car sales soared, while the banking sector has expanded, thanks to the arrival of European banks.

International financial institutions

In 1992, Ukraine became a member of the IMF and the World Bank. It is a member of the European Bank for Reconstruction and Development.

In 2008 the country joined World Trade Organization. Ukraine applied for WTO membership in 1993, but its accession process was stalled for 15 years.

Foreign direct investment

Ukraine encourages foreign trade and investment. The Parliament of Ukraine has approved a foreign investment law allowing foreigners to purchase businesses and property, to repatriate revenue and profits, and to receive compensation if the property is nationalized by a future government. However, complex laws and regulations, poor corporate governance, weak enforcement of contract law by courts, and corruption all continue to stymie direct large-scale foreign investment in Ukraine. While there is a functioning stock market, the lack of protection of shareholders' rights severely restricts portfolio investment activities.

As of April 2011 total foreign direct investment stock in Ukraine stood at $44.7 billion. Statistics from FDi Magazine show Ukraine suffered a year on year decline in foreign direct investment between 2010 and 2013.

State enterprise InvestUkraine was created under the State Agency for Investment and National Projects (National Projects) to serve as a One Stop Shop for investors and to deliver investment consulting services.

Ukraine signed a shale gas exploration deal with Royal Dutch Shell on 25 January 2013. The $10 billion deal was the largest foreign direct investment ever for Ukraine.

Many companies, owned by foreigners, have been successfully operating in Ukraine since its independence. These include companies in agriculture, such as Kyiv-Atlantic Group, founded in 1994 by David Sweere. He sold its business in Minnesota and invested in Ukraine, believing in its huge potential. The company has been operating at a profit since 2002. As a result, he became the fifth richest among the Westerners who made their fortune in Ukraine.

In 2016 foreign direct investment in Ukraine's economy amounted to $3.8 billion in 2016, which was almost twice more than in 2015.

Legal environment

According to the Global Competitiveness Report 2012-2013 "the country’s most important challenge is the needed overhaul of its institutional framework, which cannot be relied on because it suffers from red tape, lack of transparency, and favoritism".

Since the late 1990s, the government has pledged to reduce the number of government agencies, streamline the regulatory process, create a legal environment to encourage entrepreneurs, and enact a comprehensive tax overhaul. Outside institutions — particularly the International Monetary Fund — have encouraged Ukraine to quicken the pace and scope of reforms and have threatened to withdraw financial support. But reforms in some politically sensitive areas of structural reform and land privatizations are still lagging.

On June 24, 2010 Ukraine's Foreign Minister Kostyantyn Hryshchenko signed an agreement on free trade with the European Free Trade Association (EFTA).

According to specialists, a double taxation avoidance treaty with Cyprus (signed in 1982 by the Soviet Union) has cost Ukraine billions of US dollars of tax revenues.

Foreign workers

A number of foreign guest workers come to work in Ukraine, mainly in seasonal farm work and construction industry, especially from neighboring Moldova and Belarus. Meanwhile, large numbers of Ukrainian guest-workers work in Russia and EU countries.

Environmental issues

Ukraine is interested in cooperating on regional environmental issues. Conservation of natural resources is a stated high priority, although implementation suffers from a lack of financial resources. Ukraine established its first nature preserve, Askania-Nova, in 1921 and has programs to breed endangered species.

The country has significant environmental problems, especially those resulting from the Chernobyl nuclear power plant disaster in 1986 and from industrial pollution. In accordance with its previously announced plans, Ukraine permanently closed the Chernobyl Atomic Energy Station in December 2000. In November 2001, Ukraine withdrew an application it had made to the EBRD for funding to complete two new reactor units to compensate for the energy once produced by Chernobyl. Ukrainian concern over reform conditions attached to the loan - particularly tariff increases needed to ensure loan repayment—led the Ukrainian government to withdraw the application on the day the EBRD Board was to have considered final approval. Work on the so-called "object shelter" to permanently entomb the reactor where the world's worst nuclear accident occurred has been slower than anticipated but continues. Design work as well as structural improvements to the "sarcophagus" erected by the Soviet Union are largely complete, and construction on the new shelter was scheduled to begin in 2004.

Ukraine also has established a Ministry of Environment and has introduced a pollution fee system that levies taxes on air and water emissions and solid waste disposal. The resulting revenues are channelled to environmental protection activities, but enforcement of this pollution fee system is lax.

Facts & figures

  • lowest 10%: 3.4% (2006)
  • highest 10%: 25.7% (2006)
  • Industrial production growth rate: 6% (2007 est.), 6.5 (2008)

    Electricity:

  • production: 192.1 billion kWh (2006)
  • consumption: 181.9 billion kWh (2006)
  • export: 10.07 billion kWh (2005)
  • import: 20 billion kWh (2006)
  • Electricity - production by source:

  • fossil fuel: 48.6%
  • hydro: 7.9%
  • nuclear: 43.5%
  • other: 0% (2001)
  • Oil:

  • production: 90,400 barrels per day (14,370 m3/d) (2006)
  • consumption: 284,600 barrels per day (45,250 m3/d) (2006)
  • exports: 214,600 barrels per day (34,120 m3/d) (2004)
  • imports: 469,600 barrels per day (74,660 m3/d) (2004)
  • proved reserves: 395,000,000 barrels (62,800,000 m3) (1 January 2006 est.)
  • Natural gas:

  • production: 20.85 billion cubic m (2006 est.)
  • consumption: 73.94 billion cubic m (2006 est.)
  • exports: 4 billion cubic m (2006 est.)
  • imports: 57.09 billion cubic m (2006 est.)
  • proved reserves: 1.075 trillion cubic m (1 January 2006 est.)
  • Agriculture - exports: grain, sugar beets, sunflower seeds, vegetables, beef, milk

    Agriculture - imports: seafood, pork, beef, grain

    Exchange rates: hryvnia per US$1 – 22 (2015), 7.97 (2009), 5.05 (2007), 5.05 (2006), 5.13 (2005), 5.33 (May 2004), 5.30 (October 2002), 5.59 (February 2000), 5.3811 (January 2000), 4.1304 (1999), 2.4495 (1998), 1.8617 (1997), 1.8295 (1996), 1.4731 (1995)

    Minimum wage: ₴1,378/ €55 per month (2015-09-01)

    Average salary by region

    References

    Economy of Ukraine Wikipedia


    Similar Topics
    Kaalamellam Kaathiruppen
    Autumn Rowe
    Topics
     
    B
    i
    Link
    H2
    L