Ukraine has always been an important market for foreign trade and investment, as it is situated at the crossroads of Eastern Europe, Russia, and the Middle East. It used to be one of the most predominant contributors to the former Soviet economy.
The Gross Domestic Product (GDP) of the country experienced a sharp fall for the first decade of its independence, a trend that was reversed in 2000, as the country’s GDP experienced rapid growth from then up to 2008. In 2009, the economy contracted by nearly 35%. The main reasons were the drop in steel prices - Ukraine’s top exported commodity - and Ukraine’s exposure to the global financial crisis.
The Crimean crisis created uncertainty as to the annual rate of growth of the Ukrainian economy in 2014 and 2015. Nevertheless, according to statistics from the World Bank, in 2015 the country’s GDP shrunk by 9.9%.
During the last decade (2004-2015), Ukraine’s inflation rate has fluctuated considerably. Especially, in 2014 and 2015, consumer prices rose by 12.19% and 48.72% respectively. Consumer prices represent the prices that the end consumer has to pay for the product or service, including all taxes and fees due.
These instable economic conditions attracted attention internationally. This led to an assistance package of 14-18 $US billion by the IMF, in March of 2014.
Regarding foreign direct investment, in 2014 around 45.75 billion $US were invested in the country by non-residents of Ukraine. Most of this capital, almost 80%, derived from the EU. In greater depth, manufacturing, financial and insurance activities, wholesale and retail trade and professional, scientific and technical activities were the individual sectors that most benefitted from these investments.
Within this frame, the country scores moderately well, in several international indicators measuring the openness of a country’s economic and business environments. Ukraine ranked 80th out of 190 countries in the World Bank’s “Doing Business 2017” report, 162nd out of 178 countries in the 2016 Heritage Foundation’s “Index of Economic Freedom” and 56th out of 128 in the “Global Innovation Index”.
|
Year |
Measure/Indicator |
Rank |
Website Address |
|
2017 |
Doing Business report |
(80 out of 190) |
|
|
2016 |
Index of Economic Freedom |
(162 out of 178) |
|
|
2016 |
Global Innovation Index |
(56 out of 128) |
As for foreign trade, Ukraine’s imports and exports are pretty balanced. The country mostly exports metals, agricultural products like corn and wheat, minerals, a great variety of machines and equipment and processed food industry products. Its major export partners in 2015 were the Russian Federation with 12.66%, Turkey with 7.27% and China with 6.29%. On the other hand, Ukraine mostly imports mineral products such as fuels, machines and equipment, products of chemical and allied industries, plastic & rubbers, and metals. Its major import partners, again in 2015, were the Russian Federation with 19.97%, Germany with 10.60% and China with 10.05%.
Finally, the unemployment rate presented changes directly related to the Crimean Crisis. From 2009 to 2013, it gradually fell from 9.6% to 7.7%. In 2014, when these events took place, unemployment rose again to the 2009 levels. According to the State Statistics Service of Ukraine, the same pattern continued in 2015; this year’s rate was around 9.5%.