After years of strong growth, in 2009 Ukraine experienced one of the worst recessions in Europe. Growth rate decreased by -15%, under the joint effect of a decline in economic activity, drying up of foreign funding and a crisis in the global demand for steel. The country faced a collapse of its industrial production, a currency crisis, an inflation hike, and a weakening of its banking system and eventually had to be saved by the International Monetary Fund (IMF). Ukraine resumed weak growth thanks to the recovery of international trade, a political stabilization and a good harvest, yet later suffered the effects of the eurozone recession, which weakened its exports. Suffering from recession since late 2012 (the country experienced zero growth in 2013), the Ukranian economy is not expect to recover in 2014. Consumption, the main driver of growth, should be affected by the slowly rising wages given the severe budgetary constraints, but also by the rising prices.
The Ukrainian economy is going through a difficult period, while the Ukranian government faces a popular protest movement. In 2013, the macroeconomic imbalances of the country became unsustainable. As an effect of a the fixed and overvalued exchange rate (until very recently), the deficit of the current account deepened to more than 9% of the GDP and due to lack of competitiveness, exports and GDP stagnated. The international reserves fell to a very low level due to the high external payments and limited access to international bond markets. The budget deficit of 2013 reached 4.5% of the GDP and the state accumulated significant arrears. The protest movements which were sparked off in 2013 by Ukraine's decision to not sign the Association Agreement with the European Union, left 80 people dead and resulted in the deposition of president Viktor Janukovych. The political and social situation is very unstable and there is a risk of its instability becoming permanent. Russia's decision to deploy troops in Crimea has increased the risk over the country's territorial integrity. Ukraine has signed a preliminary agreement with the IMF, which should release 27 billion USD of international aid to avoid the state defaulting on payments nad limit the economic damage left by the political crisis, which has now been going on for four months. Of this amount, the IMF aid will represent between 14 and 18 billion USD.
Ukraine has finally signed the Association Agreement with the EU on June 27, 2014, which aims in particular to remove the trade barriers between the country and the European Union members.
The economic crisis had a deep social impact in Ukraine. Wages fell and unemployment rose sharply (8%). For more information, you can refer to the Ukraine Economy Watch website.
|Main Indicators||2011||2012||2013||2014||2015 (e)|
|GDP (billions USD)||163.42||176.53||178.31||134.89||136.07|
|GDP (Constant Prices, Annual % Change)||5.2||0.3||-0.0||-6.5||1.0|
|GDP per Capita (USD)||3,584||3,884||3e||2,979||3,011|
|General Government Balance (in % of GDP)||-3.2||-4.4||-4.6||-3.5e||-2.3|
|General Government Gross Debt (in % of GDP)||36.8||37.4||40.9||67.6e||73.4|
|Inflation Rate (%)||8.0||0.6||-0.3||11.4e||14.0|
|Unemployment Rate (% of the Labor Force)||7.9||7.5||7.2||10.0||9.8|
|Current Account (billions USD)||-10.25||-14.32||-16.33||-3.39e||-3.44|
|Current Account (in % of GDP)||-6.3||-8.1||-9.2e||-2.5||-2.5|
Source: IMF - World Economic Outlook Database , Last Available Data
Note: (e) Estimated Data
The agricultural sector has a major role in Ukraine’s economy. It employs around 16% of the population and contributes nearly 10% to the GDP. The main crops are cereals, sugar, meat and milk. Ukraine is the fifth biggest exporter of cereals in the world. Ukraine is rich in mineral resources, the main ones being iron and magnesium, and in energy resources (coal and gas).
The secondary sector employs 24% of the population and represents more than 30% of the GDP. The Ukrainian manufacturing sector, greatly hit by the global economic crisis of 2008-9, is dominated by heavy industries such as iron (Ukraine is the 6th biggest producer of iron in the world), and steel. These two sectors alone account for 30% of the industrial production. Coal mining, chemical and mechanical products (airplanes, turbines, locomotives and tractors) and ship building are also important sectors.
The service sector employs over 60% of the workforce and contributes up to 59% of the GDP. Ukraine is an energy transit country, providing transportation to western Europe and the Balkans, for Russian and Caspian oil and gas through its territory.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||17.2||20.7||62.1|
|Value Added (in % of GDP)||10.4||26.9||62.6|
|Value Added (Annual % Change)||-4.3||-1.8||2.9|
Source: World Bank - Last Available Data.
|Ukrainian Hryvnia (UAH) - Average Annual Exchange Rate For 1 USD||7.79||7.94||7.97||7.99||7.99|
Source: World Bank - Last Available Data.
The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Ukraine is a very open economy and the share of foreign trade in the country’s GDP has reached almost 110% (average for 2010-2012). The recession in 2009 led to a drop in exports and a reduction in domestic demand, leading to a considerable adjustment of the trade balance. In 2013, the deficit decreased by 5.7% compared to 2012, because of exports and imports declining at a fairly equal pace.
Ukraine's three main suppliers are: Russia, the Commonwealth of Independent States (CIS), Germany, Italy, China, Poland, Turkmenistan and Turkey. Russia is a major supplier of oil and gas, almost a third of Ukrainian total imports. Ukraine mainly imports fuels and oil, machinery, vehicles, electric and electronic equipment and plastics.
Its main customers are Russia and the CIS (25%), Turkey and Europe. Main export goods are iron and steel, fuels and oil, nuclear reactors and boilers, machinery and machine tools (nearly 30% of exports), and cereals.
|Foreign Trade Indicators||2009||2010||2011||2012||2013|
|Imports of Goods (million USD)||45,487||60,911||82,594||84,639||76,964|
|Exports of Goods (million USD)||39,782||51,478||68,460||68,530||63,312|
|Imports of Services (million USD)||11,070||12,137||12,707||13,936||15,388|
|Exports of Services (million USD)||13,324||15,940||18,155||18,681||19,357|
|Imports of Goods and Services (Annual % Change)||-38.9||11.1||17.7||1.9||-|
|Exports of Goods and Services (Annual % Change)||-22.0||4.5||4.3||-7.7||-|
|Imports of Goods and Services (in % of GDP)||48.0||53.6||60.6||59.1||55.4|
|Exports of Goods and Services (in % of GDP)||46.4||50.7||54.4||51.0||46.9|
|Trade Balance (million USD)||-5,343||-9,597||-18,031||-21,846||-22,128|
|Trade Balance (Including Service) (million USD)||-1,957||-3,982||-10,145||-14,346||-15,634|
|Foreign Trade (in % of GDP)||94.4||104.3||115.0||110.1||102.2|
Source: WTO - World Trade Organization ; World Bank , Last Available Data
(% of Exports)
|See More Countries||57.6%|
(% of Imports)
|See More Countries||40.8%|
Source: Comtrade, Last Available Data
|- bn USD of products exported in 2013|
|Semi-finished products of iron or non-alloy steelSemi-finished products of iron or non-alloy steel||8.3%|
|Maize or cornMaize or corn||6.1%|
|Iron ores and concentrates, incl. roasted iron...Iron ores and concentrates, incl. roasted iron pyrites||5.9%|
|Sunflower-seed, safflower or cotton-seed oil and...Sunflower-seed, safflower or cotton-seed oil and fractions thereof, whether or not refined, but not chemically modified||5.2%|
|Flat-rolled products of iron or non-alloy steel,...Flat-rolled products of iron or non-alloy steel, of a width >= 600 mm, hot-rolled, not clad, plated or coated||4.4%|
|See More Products||70.2%|
|- bn USD of products imported in 2013|
|Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons||15.4%|
|Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals||8.3%|
|Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702)||3.9%|
|Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006)||3.4%|
|Coal; briquettes, ovoids and similar solid fuels...Coal; briquettes, ovoids and similar solid fuels manufactured from coal||2.6%|
|See More Products||66.5%|
Source: Comtrade, Last Available Data
|- bn USD of services exported in 2012|
|Rail transportRail transport||12.81%|
|Air transportAir transport||12.20%|
|Sea transportSea transport||10.02%|
|Road transportRoad transport||3.65%|
|Inland waterway transportInland waterway transport||0.51%|
|Miscellaneous business,...Miscellaneous business, professional, and technical services||10.93%|
|Architectural, engineering,...Architectural, engineering, and other technical services||3.58%|
|Research and developmentResearch and development||2.08%|
|Agricultural, mining, and...Agricultural, mining, and on-site processing services||0.12%|
|Waste treatment and...Waste treatment and depollution||0.07%|
|Operational leasing servicesOperational leasing services||0.61%|
|Merchanting and other trade-related...Merchanting and other trade-related services||0.22%|
|Computer servicesComputer services||5.34%|
|Information servicesInformation services||1.15%|
|Telecommunications servicesTelecommunications services||2.64%|
|Postal and courier servicesPostal and courier services||0.24%|
|Other direct insuranceOther direct insurance||0.85%|
|Auxiliary servicesAuxiliary services||0.06%|
|Life insurance and pension fundingLife insurance and pension funding||0.01%|
|Other personal, cultural, and...Other personal, cultural, and recreational services||0.27%|
|Audiovisual and related servicesAudiovisual and related services||0.24%|
|- bn USD of services imported in 2012|
|Rail transportRail transport||9.85%|
|Air transportAir transport||9.83%|
|Sea transportSea transport||3.11%|
|Road transportRoad transport||2.98%|
|Inland waterway transportInland waterway transport||0.01%|
|Miscellaneous business,...Miscellaneous business, professional, and technical services||13.70%|
|Architectural, engineering,...Architectural, engineering, and other technical services||3.60%|
|Agricultural, mining, and...Agricultural, mining, and on-site processing services||0.87%|
|Waste treatment and...Waste treatment and depollution||0.77%|
|Research and developmentResearch and development||0.69%|
|Operational leasing servicesOperational leasing services||2.22%|
|Merchanting and other trade-related...Merchanting and other trade-related services||1.77%|
|Other trade-related servicesOther trade-related services||0.09%|
|Computer servicesComputer services||3.01%|
|Information servicesInformation services||1.72%|
|Audiovisual and related servicesAudiovisual and related services||3.28%|
|Other personal, cultural, and...Other personal, cultural, and recreational services||0.15%|
|Other direct insuranceOther direct insurance||1.68%|
|Auxiliary servicesAuxiliary services||0.69%|
|Life insurance and pension fundingLife insurance and pension funding||0.06%|
|Telecommunications servicesTelecommunications services||2.27%|
|Postal and courier servicesPostal and courier services||0.05%|
Source: Comtrade, Last Available Data
The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
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