Russia was Ukraine’s Biggest Trading Partner in 2017.
In Soviet times, the economy of Ukraine was the second largest in the Soviet Union, being an important industrial and agricultural component of the country’s planned economy. With the dissolution of the Soviet system, the country moved from a planned economy to a market economy. The transition was difficult for the majority of the population which plunged into poverty. Ukraine’s economy contracted severely following the years after the Soviet dissolution. Day-to-day life for the average person living in Ukraine was a struggle. A significant number of citizens in rural Ukraine survived by growing their own food, often working two or more jobs and buying the basic necessities through the barter economy.
By 1999, the GDP had fallen to less than 40% of the 1991 level. It recovered considerably in the following years, but as at 2014 had yet to reach the historical maximum. In the early 2000s, the economy showed strong export-based growth of 5 to 10%, with industrial production growing more than 10% per year. Ukraine was hit by the economic crisis of 2008 and in November 2008, the IMF approved a stand-by loan of $16.5 billion for the country.
Ukraine’s 2010 GDP (PPP), as calculated by the CIA, is ranked 38th in the world and estimated at $305.2 billion. Its GDP per capita in 2010 according to the CIA was $6,700 (in PPP terms), ranked 107th in the world. Nominal GDP (in U.S. dollars, calculated at market exchange rate) was $136 billion, ranked 53rd in the world. By July 2008 the average nominal salary in Ukraine reached 1,930 hryvnias per month. Despite remaining lower than in neighbouring central European countries, the salary income growth in 2008 stood at 36.8%.
As of 2016, Ukraine had average wealth per adult, at $1,254.
Ukraine produces nearly all types of transportation vehicles and spacecraft. Antonov airplanes and KrAZ trucks are exported to many countries. The majority of Ukrainian exports are marketed to the European Union and CIS. Since independence, Ukraine has maintained its own space agency, the National Space Agency of Ukraine (NSAU). Ukraine became an active participant in scientific space exploration and remote sensing missions. Between 1991 and 2007, Ukraine has launched six self made satellites and 101 launch vehicles, and continues to design spacecraft.
The country imports most energy supplies, especially oil and natural gas and to a large extent depends on Russia as its energy supplier. While 25% of the natural gas in Ukraine comes from internal sources, about 35% comes from Russia and the remaining 40% from Central Asia through transit routes that Russia controls. At the same time, 85% of the Russian gas is delivered to Western Europe through Ukraine.
Ukraine’s 2010 GDP, as calculated by the World Bank, was around $136 billion, 2011 GDP – around $163 billion, 2012 – $176.6 billion, 2013 – $177.4 billion. In 2014 and 2015, the Ukrainian currency was the world’s worst performing currency, having dropped 80 percent of its value since April 2014 since the War in Donbass and the annexation of Crimea by Russia.
The World Bank classifies Ukraine as a middle-income state. Significant issues include underdeveloped infrastructure and transportation, corruption and bureaucracy. The public will to fight against corrupt officials and business elites culminated in a strong wave of public demonstrations against the Victor Yanukovych’s regime in November 2013. However, according to the Corruption Perceptions Index, Ukraine is still the most corrupt country in Europe being ranked 142nd out of 175 countries on the world, in the latest CPI report from 2014. In 2007 the Ukrainian stock market recorded the second highest growth in the world of 130 percent. According to the CIA, in 2006 the market capitalization of the Ukrainian stock market was $111.8 billion.
Ukraine has managed to achieve certain progress in reducing absolute poverty, ensuring access to primary and secondary education, improving maternal health and reducing child mortality. The poverty rate according to the absolute criterion (share of the population whose daily consumption is below US$5.05 (PPP)) was reduced from 11.9 percent in 2000 to 2.3 percent in 2012, and the poverty rate according to the relative criterion (share of the population below the national poverty line) decreased at the same time from 71.2 percent to 24.0 percent.
The economy of Ukraine overcame the heavy crisis caused by armed conflict in southeast part of country. At the same time, 200% devaluation of Ukrainian hryvnia (national currency) in 2014–2015 made Ukrainian goods and services cheaper and more сompetitive. In 2016, for the first time since 2010, the economy grew more than 2%. According to World Bank statement growth is projected at 2% in 2017 and 3.5% in 2018.
As of 2017, according to major economic classifications of countries such as gross domestic product (at purchasing power parity) or the Human Development Index, Ukraine is the second poorest country in Europe, after Moldova.
Ukraine has a very large heavy-industry base and is one of the largest refiners of metallurgical products in Eastern Europe. However, the country is also well known for its production of high-technological goods and transport products, such as Antonov aircraft and various private and commercial vehicles. The country’s largest and most competitive firms are components of the PFTS index, traded on the PFTS Ukraine Stock Exchange.
Well-known Ukrainian brands include Naftogaz Ukrainy, AvtoZAZ, PrivatBank, Roshen, Yuzhmash, Nemiroff, Motor Sich, Khortytsa, Kyivstar and Aerosvit.
Ukraine is regarded as a developing economy with high potential for future success, though such a development is thought likely only with new all-encompassing economic and legal reforms. Although Foreign Direct Investment in Ukraine remained relatively strong since recession of the early 1990s, the country has had trouble maintaining stable economic growth. Issues relating to current corporate governance in Ukraine were primarily linked to the large scale monopolisation of traditional heavy industries by wealthy individuals such as Rinat Akhmetov, the enduring failure to broaden the nation’s economic base and a lack of effective legal protection for investors and their products. Despite all this, Ukraine’s economy was still expected to grow by around 3.5% in 2010.
In total, Ukrainian paved roads stretch for 164,732 kilometres (102,360 mi). Major routes, marked with the letter ‘M’ for ‘International’ (Ukrainian: Міжнародний), extend nationwide and connect all major cities of Ukraine, and provide cross-border routes to the country’s neighbours. There are only two true motorway standard highways in Ukraine; a 175-kilometre (109-mile) stretch of motorway from Kharkiv to Dnipro and a section of the M03 which extends 18 km (11 mi) from Kiev to Boryspil, where the city’s international airport is located.
Rail transport in Ukraine connects all major urban areas, port facilities and industrial centres with neighbouring countries. The heaviest concentration of railway track is the Donbas region of Ukraine. Although rail freight transport fell by 7.4% in 1995 in comparison with 1994, Ukraine is still one of the world’s highest rail users. The total amount of railroad track in Ukraine extends for 22,473 kilometres (13,964 mi), of which 9,250 kilometres (5,750 mi) is electrified. Currently the state has a monopoly on the provision of passenger rail transport, and all trains, other than those with cooperation of other foreign companies on international routes, are operated by its company ‘Ukrzaliznytsia’.
Transport by air is developing quickly, with a visa-free programme for EU nationals and citizens of a number of other Western nations, the nation’s aviation sector is handling a significantly increased number of travellers. The Euro 2012 football tournament, held in Poland and Ukraine as joint hosts, prompted the government to invest heavily in transport infrastructure, and in particular airports. The Donetsk airport, completed for Euro 2012, was destroyed by the end of 2014 because of the ongoing war between the government and the separatist movement.
Kiev Boryspil is the county’s largest international airport; it has three main passenger terminals and is the base for the country’s flag carrier, Ukraine International Airlines. Other large airports in the country include those in Kharkiv, Lviv and Donetsk (now destroyed), whilst those in Dnipropetrovsk and Odessa have plans for terminal upgrades in the near future. In addition to its flag carrier, Ukraine has a number of airlines including Windrose Airlines, Dniproavia, Azur Air Ukraine, and AtlasGlobal Ukraine. Antonov Airlines, a subsidiary of the Antonov Aerospace Design Bureau is the only operator of the world’s largest fixed wing aircraft, the An-225.
International maritime travel is mainly provided through the Port of Odessa, from where ferries sail regularly to Istanbul, Varna and Haifa. The largest ferry company presently operating these routes is Ukrferry.
In 2014, Ukraine was ranked number 19 on the Emerging Market Energy Security Growth Prosperity Index, published by the think tank Bisignis Institute, which ranks emerging market countries using government corruption, GDP growth and oil reserve information.
Ukraine produces and processes its own natural gas and petroleum. However, the majority of these commodities are imported. Eighty percent of Ukrainian natural gas supplies are imported, mainly from Russia.
Natural gas is heavily utilised not only in energy production but also by steel and chemical industries of the country, as well as by the district heating sector. In 2012, Shell started exploration drilling for shale gas in Ukraine—a project aimed at the nation’s total gas supply independence.
Following the armed conflict in the Donbass, Ukraine was cut off from half of coal and all of its anthracite extraction, dropping Ukrainian coal production by 22 percent in 2014. Russia was Ukraine’s largest coal supplier, and in 2014 Russia blocked its coal supplies, forcing 22 Ukrainian power plants to shut down temporarily.
After that, Ukraine started to lower imports from Russia.
In 2017, Russia accounted for 55.7 percent of total coal supplies, United States at 25 percent, the second-leading supplier.
In 2014, almost 100 percent of Ukraine’s natural gas supply came from Russia. From 2016, it all comes from the EU.
In 2014, all of Ukraine’s nuclear fuel came from Russia. By 2016, Russia’s share was down to 55 percent, Westinghouse supplying nuclear fuel for six of Ukraine’s VVER-1000 nuclear reactors.
Ukraine has been a net energy exporting country, for example in 2011, 3.3% of electricity produced were exported, but also one of Europe’s largest energy consumers. As of 2011, 47.6% of total electricity generation was from nuclear power. The largest nuclear power plant in Europe, the Zaporizhia Nuclear Power Plant, is located in Ukraine. Most of the nuclear fuel has been coming from Russia. In 2008 Westinghouse Electric Company won a five-year contract selling nuclear fuel to three Ukrainian reactors starting in 2011. Following Euromaidan then President Viktor Yanukovych introduced a ban on Rosatom nuclear fuel shipments to Europe via Ukraine, which was in effect from 28 January until 6 March 2014. After the Russian annexation of Crimea in April 2014, the National Nuclear Energy Generating Company of Ukraine Energoatom and Westinghouse extended the contract for fuel deliveries through 2020.
Coal and gas-fired thermal power stations and hydroelectricity are the second and third largest kinds of power generation in the country.
Renewable energy use
The share of renewables within the total energy mix is still very small, but is growing fast. Total installed capacity of renewable energy installations more than doubled in 2011 and as of 2012 stands at 397 MW. In 2011 several large solar power stations were opened in Ukraine, among them Europe’s largest solar park in Perovo, (Crimea). Ukrainian State Agency for Energy Efficiency and Conservation forecasts that combined installed capacity of wind and solar power plants in Ukraine could increase by another 600 MW in 2012. According to Macquarie Research, by 2016 Ukraine will construct and commission new solar power stations with a total capacity of 1.8 GW, almost equivalent to the capacity of two nuclear reactors.
The Economic Bank for Reconstruction and Development estimates that Ukraine has great renewable energy potential: the technical potential for wind energy is estimated at 40 TWh/year, small hydropower stations at 8.3 TWh/year, biomass at 120 TWh/year, and solar energy at 50 TWh/year. In 2011, Ukraine’s Energy Ministry predicted that the installed capacity of generation from alternative and renewable energy sources would increase to 9% (about 6 GW) of the total electricity production in the country.
Hedging & Refinancing Options
According to the Country Risk Classification published by the OECD, hedging and refinancing options are available.
*This article is licensed under the GNU Free Documentation License and Creative Commons CC-BY-SA 3.0 Unported (Abbreviated Version). The article is based on the article Economy of Ukraine from the free encyclopedia Wikipedia . In Wikipedia a list of authors is available.