Economy of Ukraine: Past and Today

Ukraine, being a large European economy, has a well-developed industrial base, the rich farmlands, highly trained labour and a good education system.

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

Ukraine has a major ferrous metal industry, producing cast iron, steel and a wide range of metalware, including pipes. As of 2007, Ukraine was the world's eighth largest steel producer. Another important branch is country's chemical and petrochemical industry producing coke, mineral fertilizers, acids, soda etc. Manufactured goods include metallurgical equipment, diesel locomotives, tractors, automobiles. The country possesses a massive high-tech industrial base, including electronics, arms industry, space program and is a major producer of grain, sugar, meat and milk products.

Ukraine encourages foreign trade and investment. The Verkhovna Rada (Parliament of Ukraine) has approved a foreign investment law allowing foreign investors to purchase businesses and property, to repatriate revenue and profits, and to receive compensation if the property is nationalized.

Ukraine is transporting gas from the Russian Federation to the European Union through its well-developed gas pipelines system, being the Europe's vitally important gas transiter. Ukraine is independent in its electricity supply, exporting it to other countries of Eastern Europe. The recent energy strategy provides for gradual decreasing of gas- and oil-based generation in favour of nuclear power, as well as energy saving measures, shortening of industrial gas consuming.

Since 2000 Ukraine was among the world leaders in terms of highest rate of macroeconomic indices.

In 2000-2004, after ten years of economic recession, the real Gross Domestic Product was growing at the highest rate in Europe and amounted 44.2%. In 2005, 2006, 2007 and 2008 the real GDP in Ukraine increased by 2.6%, 6.7%, 7.2% and 2,1% correspondingly.

Ukrainian economy was significantly affected by world economic and financial crisis that led to the sharp reduction of export due to the decline in world commodity prices and demand, especially for steel and chemical products, rising cost of and more restricted access to capital (both external and internal). 

Ukraine’s GDP reduced by 15,9% in 2009. The industrial output in 2009 dropped by 21,9%, core inflation reached 14,9%. Numerous budgetary problems have also been accumulated in Ukraine resulting in huge disproportions in public finance.

Anti-recessionary measures undertaken by the Government of Ukraine in 2010 allowed to stabilize the economic and financial situation in the country and to start gradual recovery of the national economy. 

GDP grew in 2010 by 4,2%. Industrial output increased 11%, demonstrating high rate of growth and good prospects of development of the real sector of economy. Positive changes occurred in foreign trade – in 2010 the volume of export grew 29,6%. This positive trend continues in 2011 – according to preliminary estimates the GDP growth in the first quarter of 2011 was over 5%. Industrial output increased in January-February 10,5% compared to the same period of 2010, export grew 46,8%.

It is expected that the GDP in 2011 will grow by 4,5%, industrial output - 6,5%, agricultural production – 2,9%, export – 16,3%.

As of January 1st 2011 total foreign direct investment in Ukraine was $44.7 billion, showing 8,5% growth compared to the previous year. Leading countries-investors are Cyprus, Germany, the Netherlands, the Russian Federation, Austria, France and the United Kingdom.

In June, 2010 the President of Ukraine presented a comprehensive program of reforms aimed at combating the consequences of the crisis, restoring sustainable growth and, as a result, at higher standards of living of the Ukrainians. 

The Program envisage main directions of transformations in all spheres of the economy in order to stabilize public finance, form a sound financial system, favourable business environment and to modernize the infrastructure and basic sectors of the economy. Special attention is paid to the improvement of social protection and providing better access to education and health care.

In 2008 Ukraine fulfilled its obligations aimed at accessing the World Trade Organization and creation of the necessary domestic economic infrastructure. On 16 May 2008 Ukraine became the 152nd member of the WTO.