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The Economy of The Ukraine

Ukrainian Economy

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Economy - overview: After Russia, the Ukrainian republic was far and away the most important economic component of the former Soviet Union, producing about four times the output of the next-ranking republic. Its fertile black soil generated more than one-fourth of Soviet agricultural output, and its farms provided substantial quantities of meat, milk, grain, and vegetables to other republics. Likewise, its diversified heavy industry supplied the unique equipment (for example, large diameter pipes) and raw materials to industrial and mining sites (vertical drilling apparatus) in other regions of the former USSR. Shortly after independence was ratified in December 1991, the Ukrainian Government liberalized most prices and erected a legal framework for privatization, but widespread resistance to reform within the government and the legislature soon stalled reform efforts and led to some backtracking. Output by 1999 had fallen to less than 40% of the 1991 level. Ukraine's dependence on Russia for energy supplies and the lack of significant structural reform have made the Ukrainian economy vulnerable to external shocks. Ukraine depends on imports to meet about three-fourths of its annual oil and natural gas requirements. Ukraine concluded a deal with Russia in January 2006 that almost doubled the price Ukraine pays for Russian gas. Disputes with Russia over pricing have led to periodic gas cut-offs. Outside institutions - particularly the IMF - have encouraged Ukraine to quicken the pace and scope of reforms. Ukrainian Government officials eliminated most tax and customs privileges in a March 2005 budget law, bringing more economic activity out of Ukraine's large shadow economy, but more improvements are needed, including fighting corruption, developing capital markets, and improving the legislative framework. Ukraine's economy was buoyant despite political turmoil between the prime minister and president until mid-2008. Real GDP growth reached roughly 7% in 2006-07, fueled by high global prices for steel - Ukraine's top export - and by strong domestic consumption, spurred by rising pensions and wages. The drop in steel prices and Ukraine's exposure to the global financial crisis due to aggressive foreign borrowing has lowered growth in 2008 and the economy probably will contract in 2009. Ukraine reached an agreement with the IMF for a $16.5 billion standby arrangement in November 2008 to deal with the economic crisis. However, political turmoil in Ukraine as well as deteriorating external conditions are likely to hamper efforts for economic recovery.

GDP:

GDP - real growth rate: 2.1% (2008 est.) 7.6% (2007 est.) 7.3% (2006 est.)

GDP - per capita:

GDP - composition by sector: agriculture: 9.3% industry: 31.7% services: 58.9% (2008 est.)

Population below poverty line:

Household income or consumption by percentage share: lowest 10%: 3.4% highest 10%: 25.7% (2006)

Distribution of family income - Gini index: 31 (2006)

Inflation rate (consumer prices):

Labor force: 21.71 million (2008 est.)

Labor force - by occupation: agriculture: 19.4% industry: 24.2% services: 56.4% (2005)

Unemployment rate: 3% officially registered; large number of unregistered or underemployed workers (2008 est.)

Budget: revenues: $65.02 billion expenditures: $68.48 billion; note - this is the planned, consolidated budget (2008 est.)

Industries: coal, electric power, ferrous and nonferrous metals, machinery and transport equipment, chemicals, food processing (especially sugar)

Industrial production growth rate: 5% (2008 est.)

Electricity - production: 182.4 billion kWh (2006 est.)

Electricity - production by source:

Electricity - consumption: 148.1 billion kWh (2006 est.)

Electricity - exports: 12.52 billion kWh (2006 est.)

Electricity - imports: 2.082 billion kWh (2006 est.)

Oil - production: 102,400 bbl/day (2007 est.)

Oil - consumption: 344,000 bbl/day (2006 est.)

Oil - exports: 190,500 bbl/day (2005)

Oil - imports: 441,200 bbl/day (2005)

Oil - proved reserves: 395 million bbl (1 January 2008 est.)

Natural gas - production: 21.05 billion cu m (2008 est.)

Natural gas - consumption: 66.32 billion cu m (2008 est.)

Natural gas - exports: 4 billion cu m (2006 est.)

Natural gas - imports: 65.4 billion cu m (2007 est.)

Natural gas - proved reserves: 1.104 trillion cu m (1 January 2008 est.)

Agriculture - products: grain, sugar beets, sunflower seeds, vegetables; beef, milk

Exports: $64.89 billion (2008 est.)

Exports - commodities: ferrous and nonferrous metals, fuel and petroleum products, chemicals, machinery and transport equipment, food products

Exports - partners: Russia 23.3%, Turkey 7.9%, Italy 5.8% (2007)

Imports: $82.52 billion (2008 est.)

Imports - commodities: energy, machinery and equipment, chemicals

Imports - partners: Russia 23.9%, Germany 11.8%, China 8.5%, Poland 8.1%, Turkmenistan 5.4% (2007)

Debt - external: $82.07 billion (31 December 2008 est.)

Economic aid - recipient:

Currency:

Currency code:

Exchange rates: hryvnia (UAH) per US dollar - 4.9523 (2008 est.), 5.05 (2007), 5.05 (2006), 5.1247 (2005), 5.3192 (2004)

Fiscal year: