The economy of Ukraine

The economy of Ukraine is an emerging free market, with a gross domestic product that fell sharply for the first 10 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 final official unemployment rates over 2009 and 2010 where 8,8% and 8,4%. Although according to the CIA World Fact book in Ukraine there is "large number of unregistered or underemployed workers".

The Ukrainian economy recovered in the first quarter of 2010. Ukraine's real GDP growth in 2010 was 4.3%, leading to per capita PPP GDP of 6,700 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.

Ukrainian politicians have estimated that 40% of its economy is in fact shadow economy.

By the mid-1980s, Ukraine had an established multi-sector, developed industry covering some 20 major industries, including power generation, fuels, ferrous and non-ferrous extraction and processing, chemicals and petrochemicals, gas, machine-building, metal-working, forestry, woodworking, building materials, light industry, and food processing. By 1990, around 300 billion kWh of energy, more than 100 million t of iron ore were being mined, and some 40 million tones of rolled steel stock and 6.5 million t of steel pipes were coming out of domestic steel mills. Ukraine was producing around 37,000 metal -cutting machine tools a year, and more than 100,000 tractors.

The energy sector produces a total capacity of more than 53 million kW, including 34.8mn kW or 65.3% at thermo-electric stations (TESs), 13.8mn kW or 25.9% at atomic energy stations (AESs) and 4.7mn kW or 8.8% at hydroelectric stations (HESs).

In the coal-mining industry, more than 300 mines are operating today in the country’s three coal-mining regions. Ukraine produces only 5.5 million t of its own oil, but its complex network of pipelines supports the operation of 10 petroleum plants. Ukraine’s gas pipelines carry Russian gas to Central and Western Europe.

Some 200 major enterprises operate in the extraction and processing of metals and in producing pipes and rolling stock. These include the world largest steel plants making cast iron, steel, rolled stock, steel bars and pipes in Kryvyi Rih, Dnipropetrovsk, Zaporizhzhia, Donetsk, Makiyivka, Mariupol and other cities.

The mechanical engineering sector includes enterprises involved in metals, oil, chemical, mining, power generating, railway stock (locomotives, passenger cars, tank-cars, and so on), road construction and vehicles (ships, aircraft, cars, urban transport), machinery and equipment for agriculture, the light and food industries, metal-cutting machine tools, and instrumentation.

Zaporizhzhia’s Motor-Sich plant manufactures aircraft engines for all the CIS. One of the world largest aerospace concerns, Pivdenniy, operates out of Dnipropetrovsk and Kharkiv’s turbines are known around the world. A high-capacity chemical plant is located in the city of Kalush.

Much of Ukraine’s industry is concentrated in the Donetsk Basin, also called the Donbas, where there are rich deposits of coal and iron ore. In addition, the Kryviy Rih area is noted for its iron-ore mines, the Nikopol area for manganese ore, and the Zakarpattia region for petroleum, salt and natural gas deposits.

Ukraine’s iron and steel industries are very important segments in the economy. Other major industries include food and beverages, non-electrical equipment, fabricated metal products, and industrial chemicals. Manufactured items include tractors, motor vehicles, rubber tires, refrigerators, washing machines, televisions, radio and electronic equipment, aluminum products, textiles, and shoes. Sugar beet processing, winemaking and distilling are the chief food processing industries. Kyiv is known for its flour and textile mills, sugar refineries, glassworks, and tobacco factories. L’viv is known for its breweries and distilleries and Odesa for its shipyards.

Iron industry is an important branch of heavy industry, one of the main parts of the foundation of the national economy of the country. Ferrous metals are the main thing for the manufacture of all instruments of production, through the quantity and quality of which largely depends the pace and extent of technological progress.
Ferrous metallurgy affects the development of all sectors of the economy, as the important customer of fuel, electricity and water. To iron industry belong mining, enrichment and agglomeration of iron, manganese and chromite ores, production of iron, steel, pipes, hardware, production of concentrates of iron and manganese ores, electro ferroalloys, pellets, fluxing limestone, refractory, ferroalloys, secondary processing of ferrous metals etc.

Ferrous Metallurgy with full technical production cycle is an important factor escorted with branches of industries, which use wastes generated in the production of metals. The most typical of these is the thermal power generation and metal engineering. The need for rational use of women labor in metallurgical areas predetermines the development of light and food industries. In addition, the development of iron industry predetermines and promotes accumulation of production in some industries, especially in iron ore and coal industries, mining of minerals.

The value of the iron industry for the Ukrainian economy is difficult to underestimate. This is explained by the fact that iron and steel industry is not the only influence on the development of all sectors of the economy of Ukraine and is the basis of their formation. Ferrous metallurgy is important export branch and largely determines the export potential of our country (iron industry products has more than 40% of exports of Ukraine).

Ukraine has a sizable industry devoted to chemical products. This includes the manufacture of mineral fertilizers, sulfuric acid, coke products, synthetic fibers, caustic soda, and petrochemicals. The industrial plants are mainly in Kyiv, Korosten, Sumy, and Fastiv.

The country’s industry includes more than 10,000 state and joint stock enterprises, and hundreds of private and community-owned SMEs that were established over the last decade in various industries.