Due to the
loss of Ukraine's largest trading partner, Russia, over the annexation of Crimea in March 2014, and exacerbated by the War in Donbass which started in April 2014[nb 1] Ukraine's economy shrank by 6.8% in 2014;[40] it had been expected to decline by 8%.[42] A Ukrainian government report stated early in February 2016 that Ukraine's economy had shrunk by 10.4% in 2015.[68] For 2015, the National Bank of Ukraine had expected a further decline of 11.6%, and the World Bank anticipated a 12% shrinkage.[43] The World Bank forecast growth of 1% in 2016.[69]
Early in February 2014, the National Bank of Ukraine changed the hryvnia into a fluctuating/floating currency in an attempt to meet IMF requirements and to try to enforce a stable price for the currency in the Forex market.[70] In 2014 and 2015, the hryvnia lost about 70% of its value against the U.S. dollar.[60][71]
The IMF agreed to a four-year loan program worth about $17.5 billion in eight tranches over 2015 and 2016, subject to conditions which involved economic reforms.[72] However, due to lack of progress on reforms, only two tranches worth $6.7 billion were paid in 2015. A third tranche of $1.7 billion was provisionally scheduled in June 2016 subject to the bringing into law of 19 further reform measures.[73][74] Some[quantify] western analysts believe that large foreign loans are not encouraging reform, but enabling the corrupt extraction of funds out of the country.[75]
Since December 2015, Ukraine has refused to pay and hence de facto defaults on a $3 billion debt payment to Russia that formed part of a December 2013 Ukrainian–Russian action plan.[76]
The turnover of retail trade in Ukraine in 2014 shrank by 8.6% (from 2013) and shrank by 20.7% in 2015 (from 2014).[77] Ukraine saw a 30.9% decline in exports in 2015,[78]
mainly because of a sharp decline in production output in Donetsk Oblast and in Luhansk Oblast (the two regions of Donbas).[78]
These two regions were responsible for 40.6% of the total export-decline rate.[78]
Before the war they had been two of the more industrial oblasts of Ukraine.[41] According to the Ministry of Economic Development and Trade, Ukraine had a surplus in its balance of payments in January–November 2015 of $566 million and has had a trade deficit of $11.046 billion during the same period in 2014.[78] On 31 December 2015, Ukraine's public debt stood at 79% of its GDP.[79] It had shrank $4.324 billion in 2015 to end up at $65.488 billion.[79] But calculated in hryvnia, the debt had grown by 42.78%.[79] In 2015, the Ministry of Social Policy of Ukraine rated 20–25% of Ukrainian households as poor.[80]
$2.526 billion entered the Ukrainian economy via remittances in 2015, 34.9% less than in 2014.[81] $431 million was sent from Ukraine to elsewhere using remittances.[81] In January 2016, Bloomberg rated Ukraine's economy as the 41st most innovative in the world,[82] down from 33rd in January 2015.[83]
In May 2016, the IMF mission chief for Ukraine, Ron van Rood, stated that the reduction of corruption was a key test for continued international support.[74] In 2015 Transparency International ranked Ukraine 130th out of 168 countries in its Corruption Perceptions Index.[84] In February 2016, historian Andrew Wilson assessed progress in reducing corruption as poor as of 2016.[85] Aivaras Abromavičius, Ukraine's then-Minister of Economy and Trade, resigned in February 2016, citing ingrained corruption.[86] In October, at a conference for foreign investors, corruption and lack of trust in the judiciary were identified[by whom?] as the largest obstacles to investment.[87]
Late in July 2016, the State Statistics Service of Ukraine reported that, compared with June 2015, real wages had increased by 17.3%.[88] Simultaneously the National Bank of Ukraine reported a $406 million surplus in Ukraine's January–June 2016 balance of payments against a deficit of $1.3 billion in the same period in 2015.[89] According to Ukraine's State Statistics Service, inflation in 2016 came down to 13.9%; while it had stood at 43.3% in 2015 and at 24.9% in 2014.[90]
The Economist has compared the severity of Ukraine's recession to that of the Greek recession in 2011–2012 – pointing to Ukraine experiencing an 8–9% decline in GDP from 2014 to 2015 and Greece experiencing an 8.1% decline of GDP in 2011–2012, and noted that not all areas of Ukraine were equally effected by the economic downturn.
Donetsk and Luhansk (the conflict zone) saw industrial production falling by 32% and 42% respectively. On the other hand, Lviv, located over 1000 km from the conflict, posted the largest jump in employment in the nation.[91]
The economy of Ukraine has overcome[when?] the severe crisis caused by armed conflict in the eastern part of country. A 200% devaluation of the hryvnia in 2014–2015 made Ukrainian goods and services cheaper and more competitive.[92] In 2016, for the first time since 2010, the economy grew by more than 2%.[44] A 2017 World Bank statement projected growth of 2% in 2017, of 3.5% in 2018 and of 4% in 2019 and 2020.[93] Inflation in Ukraine in 2017 was 13.7% (12.4% in 2016).[94]
Since about 2015, there has been a growing number of Ukrainians working in the European Union, particularly Poland. Eurostat reported that 662,000 Ukrainians received EU residence permits in 2017, with 585,439 issued by Poland. The head of the National Security and Defense Council of Ukraine has estimated that up to 9 million Ukrainians work abroad for some part of the year, and 3.2 million have regular full-time work abroad with most not planning to return. World Bank statistics show that money remittances back to Ukraine have roughly doubled from 2015 to 2018, worth about 4% of GDP.[95][96]
In Q3 2019 real GDP grew by 4.2%. The main driving factors include: increased purchasing power of the population in conditions of increase of the level of wages (during nine months of 2019 real wages increased by 9.5%); high level of business activity and preservation of investment activity, which stimulated mainly the development of construction, in particular, of industrial and transport infrastructure facilities; active consumer lending; maintaining the high dynamics of agricultural development; favorable price situation on selected world commodity markets for domestic exports and others.[97] Ukraine made its largest payment on debt in 2019 at $1.1 billion.[98]
In 2019, Fitch Ratings, a global leader in credit ratings and research, upgraded Ukraine's Long-Term foreign and National Currency Issuer Default Ratings (IDR) from "B-" to "B" and improved the outlook on the credit rating from stable to positive. Ukraine has demonstrated timely access to fiscal and external financing, improving macroeconomic stability and declining public indebtedness.[99]
Ukraine moved up seven positions in the annual World Bank Doing Business 2020 report.[100] Prudent macroeconomic management helped reduce inflation and interest rates in 2019. Inflation eased to 4.1 percent at the end of 2019 and 2.4 percent in February 2020.[101]
On 27 October 2020, the Constitutional Court of Ukraine ruled that anti-corruption legislation, including the mandatory electronic declaration of income, was unconstitutional.[102]
President Zelensky warned that if parliament did not restore these anti-corruption laws, foreign aid, loans and visa-free travel to the European Union were at risk. The Governor of the National Bank of Ukraine reported that Ukraine will not receive the scheduled $700 million IMF load before the end of 2020 because of the issue. IMF assessment teams had not visited Kyiv for eight months, which is necessary for further IMF loan tranches to be released.[103][104] In February 2021, economist Anders Åslund wrote "for months, senior Ukrainian officials have been claiming that the Ukrainian government has done everything the [IMF] could possibly demand" but "this happy talk was always detached from reality", and the relationship with the IMF remains critical.[105]
https://en.wikipedia.org/wiki/Economy_of_Ukraine