
Economy
The Ukrainian economy has overcome the consequences of the crisis which began at the end of the 80s of the XX century relatively late. Economic growth was fixed only at the turn of 1990s. In this period the Ukrainian Government succeeded in restraining inflation, completed privatization and reoriented industrial production to the foreign markets. In 1993 export shared only 26% of GDP, in 2003 - 57.6%. Within four months of 2004 GDP showed B export-based growth of 72%.
At the same time Ukraine managed to stabilize its financial system. Currently the country has a favorable balance of payments (in 2003 positive trade balance came to $59.4 million) and a permissible correlation of foreign debt to GDP (about 35-40%, while the critical index is 60%). These factors as well as the economic boom which began in 2001 encouraged a sharp influx of foreign investments ($1.4 billion in 2003; $0.7 billion in 2002).
According to the Standard & Poor’s Ratings Service, the Ukrainian sovereign credit rating makes B with the “positive” prognosis, by Moody's Investors Service it makes B1 with the “stable” prognosis and by Fitch it makes B+ with the “stable” prognosis. On January 26, 2005 the International Agency “Rating & Investment Information”, Inc (Japan) raised the rating of the Ukrainian long-term credits in foreign currency from B+ to BB-. R&I explain the rise of Ukraine’s ratings by economic growth and positive balance of payments.
Main economic indicators
GDP In 2003 real GDP rose almost 9.5%. Experts predicted a slump in the rate of economic growth for 2004, but their forecasts were faulty – GDP growth was a remarkable 12% in 2004.

Nominal GDP In 2003 GDP made up 263.2 billion UAH ($49.4 billion), in 2004 – 345.943 billion UAH ($65.272 billion).
At the same time, according to the World Economic Outlook Database (April 2004, IMF), purchasing power parity of GDP was $255 billion. In 2004 real GDP made 112% of GDP of the previous year.
GDP - per capita According to the IMF, GDP– per capita in current prices was $1028; purchasing power parity of GDP– per capita - $5312.
Inflation rate By 2001 Ukraine could stabilize its financial system and managed to restrain rampant inflation. In 2002 a deflation rate was 0.6%. However, in 2004 inflation rate grew more than 10% and made a record 12.3%. Experts explain these changes by an economic growth, which “heats” consumer and producer price indices. Among other factors that cause the inflation rate growth experts mention a rise of social benefits made by the Government on the eve of the election campaign.

Budget deficit Budget deficit hasn’t exceeded 3%, which is a result of continuous economic growth and favorable world prices for production of the key industries of Ukraine.

Public debt On October 31, 2004 Ukraine’s public debt was 84.706 billion UAH ($15.962 billion).
Unemployment rate Unemployment rate calculated in accordance with the International Labour Organization Standards makes about 9%. According to official data, it doesn’t exceed 3.6%. Due to the rise of the leading industries there is a trend towards a slow reduction in unemployment rate.

Development rate According to the UNDP ratings on human resources development index, in 2004 Ukraine took the 70th place in the world list (75th in 2003). The worst position Ukraine had since independence was fixed in 1998 - the 102d place; in 1993-94 Ukraine did the best taking the 45th place.
Industrial structure Past 14 years have seen significant changes in the industrial structure of the Ukrainian economy - a share of industry and agriculture in general volume of GDP has reduced. However, services, transportation, communications and nonproduction sphere account for about a half of GDP that testifies to a slow transition of the country to the postindustrial stage.
In comparison with the soviet period of economic development the fuel and energy complex has grown, while the light industry and machinery weakened.
Labor force – by occupation Occupational pattern can be characterized by a disproportion between production value and a number of employees at enterprises. This imbalance particularly features agricultural sector: its production makes about 13% of GDP only, while the employees in this sector form 22% of the able-bodied citizens.

Privatization In 2003 the State Property Fund for the first time fulfilled the budget plan of revenues having raised 2.15 billion UAH (about $403.3 million) from privatization. In 2004 one of the largest metallurgical enterprises “Krivorozhstal” was privatized. (However, at the beginning of 2005 the bargain was disputed in a legal form.). Though privatization has been completed in Ukraine at the beginning of 2000, the role of the public sector remains decisive.


Main Macroeconomic Indicators of Ukraine as % of the previous year
|
|
1995
|
1996
|
1997
|
1998
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
Gross domestic product
|
87,8
|
90,0
|
97,0
|
98,1
|
99,8
|
105,9
|
109,2
|
105,2
|
109,4
|
112,0
|
Industrial production
|
88
|
95
|
99,7
|
99,0
|
104
|
112
|
114
|
107
|
116
|
112
|
Agricultural production
|
96
|
91
|
98
|
90
|
93
|
110
|
110
|
101
|
89
|
119
|
Capital investments
|
72
|
78
|
91
|
106
|
100,4
|
114
|
121
|
109
|
131
|
1352)
|
Freight carried
|
80
|
75
|
97
|
91
|
92
|
100
|
103
|
104
|
116
|
105
|
Retail trade turnover
|
86
|
95
|
102
|
95
|
96
|
106
|
115
|
116
|
120
|
119
|
Industrial producers price index
|
270 1)
|
152
|
108
|
113
|
131
|
121
|
109
|
103
|
108
|
120
|
Consumer price indices
|
477
|
180
|
116
|
111
|
123
|
128
|
112
|
101
|
105
|
109
|
Export to CIS countries
|
124
|
106
|
75
|
75
|
77
|
138
|
104
|
94
|
138
|
142
|
Export to other countries
|
133
|
113
|
124
|
98
|
99
|
121
|
115
|
117
|
125
|
142
|
Import from CIS countries
|
128
|
112
|
88
|
80
|
85
|
119
|
110
|
102
|
128
|
129
|
Import from other countries
|
189
|
117
|
113
|
94
|
75
|
116
|
117
|
115
|
144
|
123
|
1) December to December 2) January-September
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Source: Interstate Statistical Committee of the CIS
Key Industries of the Ukrainian Economy
Currently the following industries are dynamically developing in Ukraine: ferrous metals, chemicals, coal and electric power. At the same time the machinery complex created in the soviet period undergoes stagnation and needs restructuring.
Statistics
State Committee of Statistics - www.ukrstat.gov.ua
Interstate Statistical Committee of the CIS - www.cisstat.com
Official statistical information on social and economic situation in the CIS countries
FINANCIAL-INDUSTRIAL GROUPS (FIGs)
Economists and political scientists are apt to classify the Ukrainian FIGs on a territorial-political basis. Such a principle of classification shows a close connection of regional business elites with the channels of political lobbying. However, this principle can’t be universal, since the Ukrainian FIGs tend to generate interim alliances in order to carry out tactical schemes.
The major Ukrainian FIGs are as follows: “System Capital Mangement” (SCM), “Donbas Industrial Union”, “Interpipe”, “Private”, “Aval”, “TAS”, “Ukrsibbank”, “Ukrprominvest”. Their funds are mainly concentrated in the mining and smelting complex.
The Ukrainian FIGs can be included in agglomerates which are formed on a regional basis and represent political-economic groups.
“Dnipropetrovskaya” political-economic group
“Donetskaya” political-economic group
“Kharkivskaya” political-economic group
“Kyivskaya” political-economic group
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