Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
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 percent, 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 good agricultural harvests continued to fuel economic growth of 3.3 percent in 2018 and 3.2 percent in 2019. Ukraine’s economy is expected to contract by 3.3% in 2020, as the country contends with the spread of Covid-19.
Ukraine’s global trade continued to grow in 2019, but imports significantly outpaced exports, resulting in Ukraine’s trade deficit nearly tripling to $10.3 billion. Ukraine’s trade balance surplus in services increased by approximately 8 percent to $6.4 billion in 2019, reflecting Ukraine’s growing role as an information technology (IT) leader. Goods exported from Ukraine increased by 5 percent in 2019.
Despite its low past economic growth and growing trade deficit, Ukraine’s economy has several bright spots, most notably agriculture, which generated approximately 9% of GDP in 2019. Last year Ukraine harvested 70 million tons and exported 50.4 million tons of grain, which was the country’s record high. Ukraine ranks among the world’s top producers of grain crops including wheat, corn, and barley. Barring weather issues, 2020 harvests will likely set new records, and agriculture will continue to support the economy. Stable agricultural growth presents significant opportunities for U.S. exporters of agricultural machinery, as well as other inputs like seeds and fertilizers.
Ukraine’s recent economic recovery and macroeconomic stabilization are supported by the International Monetary Fund (IMF). The IMF approved a USD 5 billion, 18-month Stand-By Arrangement (SBA) on June 9, 2020. It succeeds the SBA approved in December 2018, which focused on maintaining stability through last year’s elections. A staff-level agreement on a three-year USD 5.5 billion Extended Fund Facility (EFF) was reached in December 2019, but was not approved before the Covid-19 pandemic. Future IMF assistance will depend on additional reforms, including pension reform, continuing land reform, and additional steps to fight corruption. According to the IMF, per capita GDP in Ukraine is still very low—just 20 percent of the EU average and the second lowest level of all Central and 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 42.15 million people as of December 2019. Approximately 14% of the population is age 0-14, 12% is 15-24, 57% is 25-64, and 15% is 65 years and over.