Ukraine – Market Overview

Ukraine’s economy is recovering from a deep recession.

After the political and economic crisis in 2014–2015 and a cumulative economic decline of 16 percent, Ukraine’s economy began to grow slowly in 2016, with two percent growth on an annualized basis.

While the country’s turnaround was mainly associated with the reforms implemented by the first technocratic government of Ukraine, the growth in 2016 was due to a recovery in domestic investment activity and a moderate recovery in household consumption. In the future, analysts expect domestic demand to continue to stimulate economic growth of 2.5 percent in 2017 and 3.5 percent in 2018.

The biggest reason that domestic demand will lead to economic growth instead of export is the continuing trade bans of Russia against Ukraine.

In addition to the dramatic changes in trade relations, Ukraine’s exports continue to fall year after year due to global commodity prices and problems in the domestic supply chain. In March 2017, the Ukrainian government implemented new measures prohibiting trade with territories in the east of the country, effectively controlled by separatists supported by Russia. This prevents coal from going east to west and prevents mineral resources for the metallurgical industry from entering the territory not controlled by the government. Amid falling exports, Ukraine’s current account deficit increased from 0.1 percent of GDP in 2015 to 3.5 percent of GDP in 2016. All major Ukrainian exports declined in 2016, with the exception of exports of agricultural products.

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