Consulting Ukraine | Sourcing Ukraine | Market Entry | Market Research

Formerly, Ukraine was an important agricultural and industrial region of the Soviet Union, and now depends on Russia for most of its energy supplies, especially natural gas.

The current government has pledged to reduce the number of government agencies, streamline the regulatory process, create a legal environment to encourage entrepreneurs and enact a comprehensive tax overhaul. Reforms in the more politically sensitive areas of structural reform and land privatisation are still lagging. Outside institutions, particularly the IMF, have encouraged Ukraine to quicken the pace and scope of reforms and have threatened to withdraw financial support.

Economy of Ukraine

During the first half of 2007, the Ukrainian economy has been demonstrating high levels of growth, resulting from the governmental policy towards increasing the development pace in all the main sectors of the economy and providing the necessary legislation to ensure stable development of the country.

Real GDP growth in the period of January – June 2007 amounted to 7,9 % (for comparison – 5,5% during the analogous period in 2006). Growth of domestic production was observed in all kinds of economic activities, besides just the industrial production sector and distribution of energy, gas and water. The main positive issues include:

favourable business outlook of the world’s markets and an increase in steel prices,
increase of domestic demand caused by the necessity of industrial modernization,
intensification of industrial and construction activity which results in an increase of demand on freight transport,
increase of domestic demand for products and services as well (retail turnover increased by 26,4%). The main reason for this is an increase in the real income of the population (by 13,4 % in 2006, by 10,8 % in the period of January-June in 2007).

In the period of January – June 2007, CPI amounted to 104,2 % relating to December 2006. The main reason influencing this high inflation level was an increase in vegetable and fruit prices (according to December 2006, vegetables prices increased by 59,1%, fruit prices by 27,6%) connected with seasonal demand and adverse weather conditions.

Ukraine’s main natural resources are: iron ore, coal, manganese, natural gas, oil, salt, sulfur, graphite, titanium, magnesium, kaolin, nickel, mercury, timber, and arable land

The main industries are: coal, electric power, ferrous and nonferrous metals, machinery and transport equipment, chemicals, and food processing (especially sugar).

Direct investments:

Direct foreign investments in Ukraine on the first of April 2007 amounted to USD 22.4 billion (USD 481.3 per capita) and was 3,9% higher than at the beginning of the year.

For the period of January – March of 2007, the total increase of foreign investments in the Ukrainian economy amounted to USD 847.1 million.

Considerable growth of foreign capital investments in the aforementioned period was noticed for enterprises operating in Financial activities – USD 289.2 million, Construction – USD 131.3 million, Property operations, rent, engineering and business services – USD 109.2 million, as well as Industrial enterprises – USD 370 million.

Export/Import

The export of goods amounted, in the period of January – June of 2007, to USD 18.9 billion, increasing by 34,4%, while imports grew by 35 % to the level of USD 22.6 billion. Main export commodities are ferrous and nonferrous metals (44,1%), machinery and transport equipment (15,4%), agricultural and food products (12,1%), chemicals (10,7%) and mineral products (9,1%). The main product groups imported by Ukraine are: mineral products (32,3%), machinery (30,2%), chemicals (14%), unnoble metals and products from them (7,4%), and agricultural products (6,7%).

GENERAL DATA

Area: 603,700 sq km
Population: 46 294 180 (UkrStat on 1.08.07)
Capital city: Kiev (Kyiv)
Language: Ukrainian, Russian, Romanian, Polish, Hungarian
Ethnic groups: Ukrainian 77.8%, Russian 17.3%, Belarusian 0.6%, Moldovan 0.5%, Crimean Tatar 0.5%, Bulgarian 0.4%, Hungarian 0.3%, Romanian 0.3%, Polish 0.3%, Jewish 0.2%, other 1.8% (2001)
Land boundaries: Belarus, Hungary, Moldova, Poland, Romania, Romania, Russia, Slovakia

MACRO DATA