Ukraine - Country Commercial Guide
Market Overview

Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.

Last published date: 2021-09-24

Ukraine is an emerging free market economy, with many of the components of a major European economy including a well educated and well trained workforce, a solid industrial base, and rich farmlands.

Following a political and economic crisis in 2014-2015 and cumulative economic decline of 16%, Ukraine’s economy began slowly growing in 2016 with two percent year-over-year growth. While the country’s turn-around was primarily attributable to reforms implemented by Ukraine’s first technocratic government, growth in 2016 was driven by a rebound in domestic investment activity and a modest recovery in household consumption. Domestic demand and strong agricultural harvests continued to fuel economic growth of 3.3 % in 2018 and 3.2 % in 2019.

In 2021, Ukraine’s economy is expected to recover mildly at 3.6%, which is faster than anticipated and the growth is expected to rise to 3.8% in 2022 as the spread of Covid-19 slows. [1]

Ukraine’s global trade is expected to grow with imports traditionally significantly outpacing exports, resulting in a trade deficit of $6.2 billion, which is a $4.2 billion improvement in comparison with the previous year. Import of goods and services is anticipated to increase by 8.8% in 2021, while export by 5.6%.  Trade balance surplus in services is expected to increase by approximately 6 % to $16.4 billion, reflecting Ukraine’s growing role as an information technology (IT) leader.

Despite its slow past economic growth and expanding trade deficit, Ukraine’s economy has several bright spots, most notably agriculture, which generated approximately 9.3% of GDP in 2020. Ukraine plans to harvest about 76 million tons of grain in 2021, up from 65 million tons in 2020. Ukraine ranks among the world’s top producers of grain crops including wheat, corn, and barley. Stable agricultural growth presents significant opportunities for U.S. exporters of agricultural machinery, as well as other inputs like seeds and fertilizers.

Ukraine’s economic recovery and macroeconomic stabilization since 2016 are supported by the International Monetary Fund (IMF). In June 2020, Ukraine and the IMF entered into an 18-month $5 billion stand-by arrangement. At that time, the IMF disbursed the first tranche of $2.1 billion in concessionary loans to help the Ukrainian economy to weather the coronavirus pandemic. Due to reform setbacks, Ukraine has not yet qualified for a second disbursement as of September 2021.  On August 23, 2021, Ukraine received $2.7 billion worth of IMF Special Drawing Rights under a worldwide program to support the global economy during the pandemic. Future IMF disbursements will depend on fulfilling reform commitments in the areas of anti-corruption, judicial reform and fiscal discipline. According to the IMF, per capita GDP in Ukraine is just 13%[1] of the EU average in 2020 and the lowest level of all Eastern European countries. Faster, sustainable, and inclusive growth is needed to recover lost ground and improve living standards.

The population of Ukraine has undergone a major decline since the 1990s, due primarlily to the low birth rate and emigration. Ukraine’s population totaled 41.4 million people as of July 2021. Approximately 15.2% of the population is age 0-14, 59.5% is 16-59, and 17.4% is 65 years and over.

 

[1] https://www.worldbank.org/en/region/eca/publication/europe-and-central-asia-economic-update

[1] https://www.imf.org/external/datamapper/NGDPDPC@WEO/UKR/EEQ/EUQ