Economy of Ukraine

The economy of Ukraine is an emerging free market. Like other post-Soviet states, its gross domestic product fell sharply for 10 years following the collapse the Soviet Union in 1991. However, it grew rapidly from 2000 until 2008 when the Great Recession began worldwide and reached Ukraine as the 2008-2009 Ukrainian financial crisis. The economy recovered in 2010, but since 2013 the Ukrainian economy has been suffering from a severe downturn.

The depression during the 1990s included hyperinflation and a fall in economic output to less than half of the GDP of the preceding Ukrainian SSR. GDP growth was recorded for the first time in 2000, and continued for eight years. This growth was halted by the global financial crisis of 2008, but the Ukrainian economy recovered and achieved positive GDP growth in the first quarter of 2010. By October 2013, the Ukrainian economy lapsed into another recession. The previous summer Ukrainian export to Russia was substantially worsened due to stricter border and customs control by Russia. The early 2014 annexation of Crimea by Russia, and the War in Donbass that started in the spring of 2014 severely damaged Ukraine's economy and severely damaged two of the more industrial oblasts. In 2013, Ukraine saw zero growth in GDP. Ukraine's economy shrank by 6.8% in 2014, and this continued with a 12% decline in GDP in 2015. In December 2015, Ukraine declared a moratorium on debt payments to Russia and entered a de facto state of default. As of 11 January 2016, the World Bank states that despite entering default, Ukraine will experience an economic growth rate of 1% in 2016, which if true will end the recession.

The nation has many of the components of a major European economy - rich farmlands, a well-developed industrial base, highly trained labour, and a good education system. At present, however, the economy remains in poor condition. It is still smaller than it was in 1992.

Due to the loss of its largest trading partner, Russia, over the annexation of Crimea, and exacerbated by the War in Donbass Ukraine's economy shrank by 6.8% in 2014; it had been expected to decline by 8%. The early 2014 annexation of Crimea by Russia also contributed to this shrank. A Ukrainian Government report stated early February 2016 that Ukraine's economy had shrank by 10.4% in 2015. For 2015 a further decline of 11.6% had been expected by the National Bank of Ukraine and a 12% shrank according to the World Bank. The World Bank forecasts a growth of 1% in 2016.

Early 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. In 2014 and 2015 the hryvnia lost about 70% of its value against the U.S. dollar.

An IMF four-year loan program worth about $17.5 billion was agreed in eight tranches over 2015 and 2016, subject to conditions regarding economic reforms. 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 may be paid in June 2016 subject to the bringing into law of 19 further reform measures. Some western analysts believe that large foreign loans are not encouraging reform, but enabling the corrupt extraction of funds out of the country.

Since December 2015 Ukraine refuses to and hence de facto defaults a $3 billion debt payment to Russia that was part of a December 2013 Ukrainian–Russian action plan.

The turnover of retail trade in Ukraine in 2014 shrank by 8.6% (from 2013) and shrank by 20.7% in 2015 (from 2014). Ukraine saw a 30.9% decline in exports in 2015. Mainly because of a sharp decline in production output in Donetsk Oblast and Luhansk Oblast (the two regions of Donbass). These two regions were responsible for 40.6% of the total export decline rate. Before the war they had been two of the more industrial oblasts of Ukraine. According to the Ministry of Economic Development and Trade Ukraine had a surplus of the balance of payments in January–November 2015 of $566 million and have had a trade deficit of $11.046 billion during the same period in 2014. On 31 December 2015 Ukraine's public debt was at 79% of its GDP. It had shrank $4.324 billion in 2015 to end up at $65.488 billion. But calculated in hryvnia the debt had grown 42.78%. In 2015 the Ministry of Social Policy of Ukraine rated 20-25% of Ukrainian households as poor.

$2.526 billion were sent into the Ukrainian economy using remittances in 2015, 34.9% less than in 2014. $431 million was sent from Ukraine to elsewhere using remittance. In January 2016, the US company Bloomberg rated Ukraine's economy as the 41th most innovative in the world, down from 33d in January 2015.

According to historian Andrew Wilson, as of 2016 progress in reducing corruption was poor, with a 2015 survey showing that 72% of adults blame "corruption of power" for the lack of progress in reform. In 2015 Transparency International ranked Ukraine 130th out of 168 countries in its Corruption Perceptions Index. Ukraine's Minister of Economy and Trade, Aivaras Abromavicius and his entire team resigned in February 2016 alleging ingrained corruption, plunging the economy into renewed crisis. In May 2016 the IMF mission chief for Ukraine stated that the reduction of corruption was a key test for continued international support.

Ukraine is subdivided into nine economic regions: Carpathian, Northwestern, Podillia, Capital, Central-Ukrainian, Northeastern, Black-Sea-Coastal, Trans-Dnipro, and Donetsk. Those regions were redrawn from the three Soviet economic regions of the Ukrainian SSR: Donetsk-TransDnieper, Southwestern, and Southern.\

Ukraine is the 8th most popular tourism destination in Europe with 23 million visitors in 2012. The country's tourism industry is generally considered to be underdeveloped, but it does provide crucial support for Ukraine's economy. In 2012, the contribution of tourism to the GDP amounted to 28.8 billion ₴, or 2.2% of GDP and directly supported 351,500 jobs (1.7% of total employment).

Ukraine's neighbours (Poles, Slovaks, Hungarians, Belarusians and even Russians) are known to come to Ukraine to purchase products and presents, such as food or gasoline, that are cheaper in Ukraine than in their home countries.

Ukraine has impressive landscapes, ruins of ancient castles, historical parks, vineyards where they produce native wines, unique structures such as Saint Sophia Cathedral or Chersonesos. Officially, there are seven World Heritage Sites in Ukraine. The Carpathian Mountains suitable for skiing, hiking, fishing and hunting. Bukovel — is the largest ski resort in Ukraine situated in the Ivano-Frankivsk Oblast (province) of western Ukraine. The 2010-2011 winter season recorded 1,200,000 day visits with foreigners amounting to 8-10% of all visitors. In 2012 the Bukovel was named the fastest growing ski resort worldwide. The coastline on the Black Sea is a popular summer destination for vacationers, especially Odessa.