Economic Overview

Ukraine’s economy is volatile at best, leaving little hope for the country to pull itself out of any difficulty. One problem is that each region in Ukraine is highly dependent on a specific industry for money. When that industry fails, the entire region tends to fail. Furthermore, most of Ukraine’s lucrative businesses are based in the eastern half of the country, which typically gives that half (and Russia) a bit more political and economic power. Although Ukraine’s economy depends mainly on its metallurgical industry, it also gains much revenue from grain, military exports and energy transit. However, each of these sectors is suffering from deep problems that could not be easily fixed even if the country had the proper tools.

Ukraine did not start to pull out of its post-Soviet economic slump until around 2000, when the country began to see the results of rebuilding and modernizing its core sectors -- heavy industrial manufacturing and agriculture. But the 2008 global economic crisis hit Ukraine hard, shrinking its economy by 15 percent in 2009. A major component of this was steel demand, which fell 43 percent in 2009. During the crisis, inflation soared to 16.4 percent, and the value of Ukraine’s currency, the hryvnia, dropped by 38 percent against the dollar. Ukrainian banks faced depositor flight during the crisis due to instability and lack of confidence, forcing the government to nationalize more than a dozen banks.

The International Monetary Fund (IMF) planned on loaning $16.43 billion to Ukraine, though only $2.2 billion has been released -- the rest of the world, especially other European countries, were begging for funds as well. The IMF money that was released showed little effect, entangled as it was in the volatile political situation at the time, with every faction fighting for (and stealing) funds. Russia also stepped up to help Ukraine, issuing a $5 billion loan, which also became entangled in the factional fighting.

With the new and more stable government coming into office in 2010, Ukraine’s economy has seen some recovery. Inflation has fallen to around 7 percent, growth for 2011 is projected to be 4.5 percent and private consumption and investment is starting to pick back up, due mainly to plans for the Euro 2012 football (soccer) tournament (more on this below). Ukraine’s economic activity is expected to surpass its pre-crisis peak by 2013.

Regarding information technology specifically (including software), the sector now ranks fourth among Central and Eastern European countries. The IT sector was virtually immune to the global financial and domestic political crises that hit Ukraine, since it is isolated from the country’s strategic economic sectors, which rise and fall together, and has not been as affected by government interference. Ukraine’s IT industry has actually grown since 2004 and this growth is expected to continue.

Дата добавления: 2015-11-16