The Ukrainian Economy
The economy of Ukraine is an emerging free market, with a gross domestic product that has experienced rapid growth in recent years. Ukraine's economy is ranked 33rd in the world according to 2007 GDP (PPP). Formerly a major component of the economy of the Soviet Union (both in industry and agriculture), the country's economy experienced major recession during the 1990s, including hyperinflation and drastic falls in economic output; GDP growth was first registered in 2000, and reforms are continuing. In 2007 the economy continued to grow and posted real GDP growth of 7%. Ukraine has been greatly affected by the economic crisis of 2008/9.
Ukraine 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. Ukraine is relatively rich in natural resources, particularly in mineral deposits. Although oil reserves in the country are largely exhausted, it has other important energy sources, such as coal, natural gas, hydroelectricity and nuclear fuel raw materials. Ukraine is a major producer of grain, sugar, meat and milk products.
Most of Ukrainian trade is conducted with Russia and the European Union. An overcrowded world steel market threatens prospects for Ukraine's principal exports of non-agricultural goods such as ferrous metals and other steel products. Although exports of machinery and machine tools are on the rise, it is not clear if the rate of increase is large enough to make up for probable declines in steel exports, which today account for 46% of the country's overall exports.
Ukraine imports 90% of its oil and most of its natural gas. Russia ranks as Ukraine's principal supplier of oil, and Russian firms now 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. Instead, Ukraine is transporting Russian gas to the EU through its well-developed gas pipelines system, being Europe's vitally important connection.
Ukraine is 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 the World Trade Organization.
Ukraine and the economic crisis of 2008/9
Ukraine has been hit heavily by the economic crisis of 2008/9, analysts say the plights of Ukraine are slumping steel prices. Key industries such as metallurgy and machine building are laying off workers, and real wages have started to fall for the first time in a decade. This makes it hard for Ukrainians to make payments on loans, many of which, especially mortgages, were issued in dollars. Since most people are paid in hryvnyas, they have to buy dollars with the weak hryvnya and are paying back much more on the loans than they had expected. The share of problem loans in bank portfolios grew to 10.3 percent by December 2008 and is continuing to grow. Banks have all but stopped issuing loans, and clients have hurried to withdraw deposits. In October 2008 the National Bank of Ukraine introduced a moratorium on withdrawals ahead of schedule.[8]
In November 2008, the IMF approved a stand-by loan programme for Ukraine of $16.5 billion.
Mid-December 2008 the International Monetary Fund (IMF) has lowered the forecast for Ukraine's GDP in 2009 from a 2.5% growth rate to a 5% decline.
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