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Ukraine is a country in Central and Eastern Europe.

Ukraine borders the Russian Federation to the east and northeast, Belarus to the northwest, Poland, Slovakia and Hungary to the west, Romania and Moldova to the southwest, and the Black Sea and Sea of Azov to the south and southeast, respectively. Ukraine became independent when the Soviet Union dissolved in 1991. This dissolution started a period of transition to a market economy, in which Ukraine was stricken with an eight-year recession. Since then, however, the economy experienced a high increase in GDP growth. Ukraine was caught up in the worldwide economic crisis in 2008 and the economy plunged. GDP fell 20% from spring 2008 to spring 2009, and then leveled off as analysts compared the magnitude of the downturn to the worst years of economic depression during the early 1990s. However, the country remains a globally-important market and supplier, particularly, the world's third biggest grain exporter (as of 2011). Ukraine is a republic under a semi-presidential system with separate legislative, executive, and judicial branches. Since the dissolution of the Soviet Union, Ukraine continues to maintain the second largest military in Europe, after that of Russia. The country is home to 46 million people, 77.8 percent of whom are ethnic Ukrainians, with sizable minorities of Russians (17%), Belarusians and Romanians. The Ukrainian language is the official language in Ukraine. Russian is also widely spoken. The dominant religion in the country is Eastern Orthodox Christianity, which has heavily influenced Ukrainian architecture, literature and music. Government: President: Unitary semi-presidential republic Viktor Yanukovych

Prime Minister:Mykola Azarov Area: 603,628 km. Population 2010 estimate 45,888,000[3] (28th) 2001 census 48,457,102[2] Density 77/km2 (115th) 199/sq mi GDP (PPP) 2011 estimate Total Per capita $320.221 billion $7,077

GDP (nominal) 2011 estimate Total Per capita $157.659 billion $3,484

Brief of Ukraine:
In Soviet times, the economy of Ukraine was the second largest in the Soviet Union, being an important industrial and agricultural component of the country's planned economy. With the dissolution of the Soviet system, the country moved from a planned economy to a market economy. The transition process was difficult for the majority of the population which plunged into poverty. Ukraine's economy contracted severely following the years after the Soviet dissolution. Day to day life for the average person living in Ukraine was a struggle. A significant number of citizens in rural Ukraine survived by growing their own food, often working two or more jobs and buying the basic necessities through the barter economy. In 1991, the government liberalized most prices to combat widespread product shortages, and was successful in overcoming the problem. At the same time, the government continued to subsidize state-run industries and agriculture by uncovered monetary emission. The loose monetary policies of the early 1990s pushed inflation to hyperinflationary levels. For the year 1993, Ukraine holds the world record for inflation in one calendar year. Perhaps no other economic issue has been more perplexing than Ukraine's two-year slide into hyperinflation in late 1993. From 1991-93, Ukraine had the worst inflation record of any former Soviet republic, with average monthly price increases of 33 percent from 1992 to mid-1994. Prices stabilized only after the introduction of new currency, the Hryvnia, in 1996. In the meantime, by 1999, the GDP had fallen to less than 40 percent of the 1991 level, but recovered to slightly above the 100 percent mark by the end of 2006. In the early 2000s, the economy showed strong export-based growth of 5 to 10 percent, with industrial production growing more than 10 percent per year. Ukraine was hit by the economic crisis of 2008 and in November 2008, the IMF approved a stand-by loan of $16.5 billion for the country. Ukraine's 2010 GDP (PPP), as calculated by the CIA, is ranked 38th in the world and estimated at $305.2 billion. Its GDP per capita in 2010 according to the CIA was $6,700 (in PPP terms), ranked 107rd in the world. Nominal GDP (in U.S. dollars, calculated at market exchange rate) was $136 billion, ranked 53st in the world. By July 2008 the average nominal salary in Ukraine reached 1,930 hryvnias per month. Despite remaining lower than in neighboring central European countries, the salary income growth in 2008 stood at 36.8 percent. According to the UNDP in 2003 4.9 percent of the Ukrainian population lived under 2 US dollar a day and 19.5 percent of the population lived below the national poverty line that same year. Ukraine produces nearly all types of transportation vehicles and spacecraft. Antonov airplanes and KrAZ trucks are exported to many countries. The majority of Ukrainian exports are marketed to the European Union and CIS. The country imports most energy supplies, especially oil and natural gas, and to a large extent depends on Russia as its energy supplier. While 25 percent of the natural gas in Ukraine comes from internal sources, about 35 percent comes from Russia and the remaining 40 percent from Central Asia through transit routes that Russia controls. At the same time, 85 percent of the Russian gas is delivered to Western Europe through Ukraine.

The World Bank classifies Ukraine as a middle-income state. Significant issues include underdeveloped infrastructure and transportation, corruption and bureaucracy. In 2007 the Ukrainian stock market recorded the second highest growth in the world of 130 percent. According to the CIA, in 2006 the market capitalization of the Ukrainian stock market was $111.8 billion. Growing sectors of the Ukrainian economy include the information technology (IT) market, which topped all other Central and Eastern European countries in 2007, growing some 40 percent. Ukraine has a very large heavy-industry base and is one of the largest refiners of metallurgical products in Eastern Europe. However, the country is also well known for its production of hightechnological goods and transport products, such as Antonov aircraft and various private and commercial vehicles. The country's largest and most competitive firms are components of the PFTS index which is traded on the PFTS Ukraine Stock Exchange. Ukraine is regarded as being a developing economy with high potential for future success, however such a development is thought to be likely only with new all-encompassing economic and legal reforms. Although Foreign Direct Investment in Ukraine has remained relatively strong ever since recession of the early 1990s, the country has had trouble maintaining stable economic growth. Issues relating to current corporate governance in Ukraine are primarily linked to the large scale monopolization of traditional heavy industries by wealthy individuals such as Rinat Akhmetov, the enduring failure to broaden the nation's economic base and a lack of effective legal protection for investors and their products.

Economy of Ukraine
The economy of Ukraine is an emerging free market, with a gross domestic product that fell sharply for the first 10 years of its independence from the Soviet Union and then experienced rapid growth from 2000 until 2008. Formerly a major component of the economy of the Soviet Union, the country's economy experienced a deep recession during the 1990s, including hyperinflation and a drastic fall in economic output. In 1999, at the lowest point of the economic crisis, Ukraine's per capita GDP was about half of the per capita GDP it achieved before independence. GDP growth was first registered in 2000, and continued for eight years. In 2007 the economy continued to grow and posted real GDP growth of 7%. In 2008, Ukraine's economy was ranked 45th in the world according to 2008 GDP (nominal) with the total nominal GDP of 188 billion USD, and nominal per capita GDP of 3,900 USD. However Ukraine was greatly affected by the economic crisis of 2008 and as a result a 15.1% decrease in Ukraine's GDP took place over 2008 and 2009. Inflation slowed in July 2009 and stayed at about 8% since. The Ukrainian currency, which had been pegged at a rate of 5:1 to the U.S. dollar, was devalued to 8:1, and was stabilized at that ratio. There was 3% unemployment at the end of 2008; over the first 9 months of 2009, unemployment averaged 9.4%.

The Ukrainian economy recovered in the first quarter of 2010. Ukraine's real GDP growth in 2010 was 4.2%, leading to per capita PPP GDP of 3030 USD. The resumed growth has been helped by growth in neighboring Russia, which is by far the country's largest trading partner and export market.

Fiscal Policy:
Population below poverty line 35% (2009) Labor forces 22.06 million (2009 est.)


7.9% (2011 est.) country comparison to the world: 94 8.1% (2010 est.) 237 / 319 $, monthly (Jan-Aug 2011)[3] Coal, electric power, ferrous and nonferrous metals, machinery and transport equipment, chemicals, food processing (especially sugar)

Average gross salary Main industries

Industrial production growth rate: 6.5% (2011 est.) country comparison to the world: 50


revenues: $43.79 billion expenditures: $50.35 billion(2011 est.)

Budget surplus (+) or deficit (-): -4% of GDP (2011 est.) country comparison to the world: 126 Public debt: 44.8% of GDP (2011 est.) country comparison to the world: 63 42.3% of GDP (2010 est.) $111.7 billion (31 December 2011 est.) country comparison to the world: 40 $99.51 billion (31 December 2010 est.)

Debt - external:

Ukraines Economic growth over the years:

Faster revenue growth and tight control over expenditures led to a decrease in the state budget deficit to 4.4% of GDP, a notable reduction compared to 8.9% of GDP in 2009 and 7% of GDP in 2010. However, the government missed the IMF target for the general government deficit set at 3.5% of GDP. The higher than planned deficit was the result of larger Naftogaz and Pension Fund imbalances due to the government resistances to raise natural gas tariffs to the population and delays with pension reform implementation, respectively.

In 2012, the government is set to continue its fiscal consolidation efforts. However, the overall public sector deficit may again miss the IMF target. The 2012 budget law, approved at the end of 2011, was developed based on a rather conservative scenario. State budget proceeds are forecast to increase by less than 6% yoy. The rise in government expenditures is also expected to be moderate. As a result, the state budget deficit is projected to stay at around 1.7% of GDP. However, as measures to sustain Naftogaz finances are still pending and there is a risk of pre-election fiscal loosening, the 2012 general government deficit is forecast at about 3.5% of GDP. Despite further deficit reduction, public finances may remain strained in 2012. First, cooling economic growth. Second, raising sufficient budget financing may be a challenging task for Ukraine. However in the second half of 2011, Ukraine faced more difficult financing conditions. The intensification of the sovereign debt crisis in the Euro area increased the costs of borrowing and tightened access to foreign financing on international financial markets. On the domestic market, liquidity squeezes during August-November and an increased risk of Hryvnia depreciation reduced demand for Hryvnia-denominated domestic debt securities. Despite the above measures, 2011 borrowing plans were under-fulfilled. As a result, the public debt-toGDP ratio declined to about 36% of GDP in 2011. Although this level is relatively low, a significant share of public liabilities is due within one year (about 20% of the total). Given that the situation on foreign financial markets will likely remain difficult, resumption of the IMF program will not only provide scarce and cheap financial resources but will also help to maintain the private external debt rollover ratio. The latter, in turn, will help to mitigate Hryvnia depreciation pressures stemming from high external imbalances. Hence, the Ukrainian authorities are likely to make efforts to restore IMF cooperation during 2012. However, given the socially painful actions required by the IMF (such as raising natural gas tariffs to population), the outlook for IMF disbursement before parliamentary elections looks rather weak.

Monetary Policy:
Inflation (CPI) 9% (2011-12 est.) country comparison to the world: 185 9.8% (2010) (12.3% in 2009)

Central bank discount rate: 11.97% (31 December 2010 est.) country comparison to the world: 30 10.25% (31 December 2009 est.) Commercial bank prime lending rate: 15% (31 December 2011 est.) country comparison to the world: 38 15.869% (31 December 2010 est.) Exchange rates: hryvnia per US$1 7.97 (2009), 5.05 (2007), 5.05 (2006), 5.13 (2005), 5.33 (May 2004), 5.30 (October 2002), 5.59 (February 2000), 5.3811 (January 2000), 4.1304 (1999), 2.4495 (1998), 1.8617 (1997), 1.8295 (1996), 1.4731 (1995)

According to the State Statistics Committee of Ukraine, consumer prices grew by 0.2% in January 2012 compared to the previous month, a record low monthly inflation rate for that month. In annual terms, inflation eased to 3.7%. Further disinflation progress was achieved mainly thanks to the continuing spillover effect of plentiful 2011 agricultural harvest on food prices and high base effect. Indeed, although food prices grew by 0.1% in January compared to the previous month, in annual terms they were 0.5% lower than in January last year. In addition, domestic fuel prices declined by 0.3% mom in January 2012, reflecting downward correction of world energy prices during November-December 2011. As foods and fuels are among the weightiest components in the consumer price index, their price developments helped to compensate for increases in housing costs, water supply, sewage and education services. Despite a favorable start, we believe inflation may reach about 9% yoy in 2012 amid a low statistical base for comparison in the second half of the year, robust consumption and utility tariff adjustments closer to the end of the year.

Tight monetary conditions will also support moderate inflation path during 1H 2012. Targeting Hryvnia exchange rate stability, during the first two months of 2012 the National Bank of Ukraine continued to use liquidity management tools and foreign currency interventions to curb Hryvnia exchange rate volatility. Thus, a surge in budget spending at the end of the year and some relaxation of mandatory reserve requirements in December 2011 led to significant improvement in banking sector liquidity at the end of 2011 and the beginning of 2012. Daily cash balances on commercial banks correspondent accounts grew to an average of UAH 23.6 billion in January 2012 compared to less than UAH 15 billion on average for July-November 2011. Higher banking sector liquidity closely correlated with intensified Hryvnia depreciation pressures on the interbank forex market at the beginning of 2012. This prompted the NBU to intervene in the market by selling $0.9 billion of foreign currency from its international reserves on a net basis in January. Due to the sterilization effect of NBU forex interventions, Hryvnia deposit outflow, continuing government borrowings to replenish depleted state coffers, and limited liquidity provision by the NBU, monetary conditions have started tightening. Thus, the monetary base contracted by 4.2% mom in January, while money supply went down by 1.5% mom. By mid-February, cash balances on correspondent accounts fell to about UAH 13.5 billion. While tight liquidity resulted in Hryvnia appreciation pressures on the interbank forex market, it also affected credit availability. In January 2012, the stock of commercial bank credit contracted by 0.8% mom. In annual terms, loan growth eased to 9% yoy. Due to forthcoming parliamentary elections, scheduled for October 2012, we expect monetary policy to stay unchanged during this period. As this suggests tight monetary conditions, loan growth is

likely to remain subdued, impeding private investments and contributing to economic growth slowdown.

Trade Policy:
Exports Export goods $49.71 billion (2010 est.) ferrous metals and nonferrous metals, fuel and petroleum products, chemicals, machinery and transport equipment, food products

Main export partners Russia 21.1%, Turkey 5.3%, China 3.8% (2009) Imports $53.54 billion (2010 est.) ($45.05 billion 2009 est.)

Import goods energy, machinery and equipment, chemicals Main import partners Russia 28%, Germany 8.6%, People's Republic of China 6.1%, Kazakhstan 4.9%, Poland 4.9% (2009) Gross external debt $97.5 billion (31 December 2010 est.)

According to NBU data, the current account deficit slightly narrowed to $1.2 billion in December 2011, compared to $1.5 billion a month before. A smaller current account deficit was achieved thanks to foreign trade balance improvement, a rather unusual trend for the last month of the year, and a lower income account deficit. Despite challenging external financial market conditions, Ukraine maintained a sufficient inflow of foreign capital in December. Higher net FDI inflows and solid corporate sector borrowings from abroad

more than compensated for large external debt repayments (both private and public) and strong population demand for foreign currency in December. Ukraines full-year external position in 2011 was slightly better than expected. Overall, however,external imbalances increased in 2011, making the country more vulnerable to unfavorable external developments. Thus, the full year current account gap reached $9.3 billion or 5.5% of GDP compared with 2% of GDP in 2010.

The intensification of the sovereign debt crisis in the euro area prompted foreign investors to reduce their outward capital flows and increased the cost of borrowing. As a result,net foreign capital flows to Ukraine slowed substantially in the second half of the year. Ukraines external debt financing needs are estimated at about $54 billion in 2012. Out of this amount, $8 billion is due by government authorities and about $12 billion and $34 billion are due by banks and corporations respectively. Furthermore, current account deficit, though projected to improve to about 4.9% of GDP in 2012, and population demand for foreign currency will add to foreign funding needs. On a positive note, a significant portion of these liabilities represents more stable foreign trade credit and related-party debt.

Public Finances:
Public debt Revenues Expenses Economic aid 38.4% of GDP (2010 est.) $41.18 billion (2009 est.) $49.79 billion; note - this is the consolidated budget (2009 est.) recipient: $409.6 million (2006); IMF Extended Funds Facility $2.2 billion (1998)

Credit rating Standard & Poor's: BB- (Domestic) B+ (Foreign) B+ (T&C Assessment) Outlook: Stable. B2 Outlook: Stable B Outlook: Stable



Foreign reserves

US$39.311 billion (April 2011)

Issues with Ukraines Economy:

Demographic crisis Ukraine has been in a demographic crisis since the 1980s because of its high death rate and a low birth rate. The population is shrinking by over 150,000 a year. The birth rate has recovered in recent years from a catastrophically low level around 2000, and is now comparable to the European average, but would need to increase by another 50% or so to stabilize the population. In 2007, the country's population was declining at the fourth fastest rate in the world. Life expectancy is falling. The nation suffers a high mortality rate from environmental pollution, poor diets, widespread smoking, extensive alcoholism, and deteriorating medical care. According to the United Nations poverty and poor health care are the two biggest problems Ukrainian children face.