Economy

Ukraine represents one of top thirty world economies, with below average per capita income, and above average economic growth.

In the Soviet times, the economy of republic was the second largest in the Soviet Union, being an important industrial and agricultural component of country's planned economy. With the collapse of Soviet system, the country progressed toward a market economy, but the move was somewhat longer and more painful than the proponents of shock therapy were to advise.

In 1991, the government liberalized most prices in order to combat widespread product shortages, and was successful in overcoming the problem. In the same time, the government continued to subside the government-owned industries and agriculture by uncovered monetary emission. The loose monetary policies of early 1990s pushed inflation to hyperinflationary levels. For the year 1993 Ukraine holds the world record for inflation in one calendar year. The prices stabilized only after the introduction of new currency, hryvnia in 1996.

The country was also slow in the implementation of structural reforms. Following independence, the government erected a legal framework for privatization. However, widespread resistance to reforms within the government and from a significant part of population soon stalled the reform efforts. A large number of governed-owned enterprises were exempt from the privatization process. Meantime, by 1999, the output had fallen to less than 40% of the 1991 level.

Since the late 1990s the 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.

Outside institutions - particularly the IMF - have encouraged Ukraine to quicken the pace and scope of reforms and have threatened to withdraw financial support. But reforms in some politically sensitive areas of structural reform and land privatizations are still lagging.

In early 2000s the economy showed strong export-based growth of 5% to 10%, with industrial production growing more than 10% per year. The growth was largely attributed to a surge in exports of metals and chemicals to China.

In 2005, the economic growth temporary slowed down due to unfavorable changes in terms of trade, as world energy prices went up and metal prices went down. In 2006, the economy is again experiencing above 5% growth. The growth was undergirded by strong domestic demand and growing consumer and investor confidence.

The current Ukrainian economy is a typical example of a post-soviet era developing economy. The World Bank classifies Ukraine as a lower middle-income state. Some significant issues are underdeveloped infrastructure and transportation, corruption and bureaucracy, and a lack of modern-minded professionals - despite the large number of universities. But the rapidly growing Ukrainian economy has a very interesting emerging market with a relatively big population, and large profits associated with the high risks. The Ukrainian stock market grew up 10 times between 2000 and 2006, including the tremendous 341% growth in 2004, followed by 28% growth in 2005, and 24% growth in 2006.

In a cross-country comparison, Ukraine is still one of the relatively poor and corrupted countries in Europe. The average nominal salary in Ukraine on September 2006 was 1004.1 UAH which is around 150 EUR, according to the Ministry of Economy of Ukraine. For 2006, the Index of Economic Freedom of Ukraine was 3.24, rank 99 amongst 157 states; the Corruption Perceptions Index of Ukraine was 2.8, rank 99 amongst 163 states.

The country imports most energy supplies, especially oil and natural gas, and to a large extent depends on Russia as the only monopolistic energy supplier, although lately Ukraine has been trying to diversify its sources.

back	top

For investors: new entry

Novokahovskyi Lime-Sand Brick Plant Purposes of company: Investments Company description: Market Overview:  Construction volume is increasing 20-25% annually, creating an increased demand for high quality façade bricks. The industrial capacity of façade bricks is estimated at 200 million bricks per year. In 2006, a construction boom is expected in southern Ukraine, where the plant is located. The product is used mainly by construction companies and private companies. Project Overview: Using KSE-400 (Germany) Equipment supplier offers trainings for the buyer’s staff Can produce 30 million bricks per year including high quality hollow façade bricks, ordinary bricks, molded bricks, white and colored bricks Competitive Advantages: Production of lime-sand bricks is considerably more energy efficient than the production of ceramic bricks. Moreover, the project envisions the reconstruction of one of the two pit-type 50-ton lime-burning kilns; using coal, automatic blending, loading, and burning will save on gas Plant produces its own lime; a sand-pit is located close to the plant No high quality lime-sand hollow bricks are produced in southern Ukraine Due to the considerable decrease in the weight of the bricks, delivery and transportation becomes much easier; bricks can be transported by auto, railway (via the plant’s rail track), or by water (a river port is 8 km away) Investment Project Progress:  Market research has been conducted Key Financials: Total Investment - € 1.5 mln Investment Needed - € 1.5 mln Payoff period - 5 years Branch: Construction materials see more Purposes of company: Investments Company description:    Branch: Construction materials see more

For Buyers: new entry

Lana Private Manufacturing-Commercial Firm Purposes of company: Export Company description: Lana produces a wide variety of wood furnishings for the discerning customer. Lana specializes in high-quality, premium home furnishings created from solid wood, including: furniture, entry and interior doors, parquet, furniture façades, interior decorations, and staircases. Buyers can choose from distinctive creations of Lana’s innovative design team or provide their own designs. No matter how intricate the design, Lana’s highly-trained specialists will surpass their customers’ expectations. Lana’s experienced team tightly controls the manufacturing process from start to finish, from selection and processing of only the finest lumber to careful inspection and meticulous hand-finishing of each item produced.   Lana is a family-owned business. This company has been successful in Ukraine and the countries of the former Soviet Union for over 15 years. The key to Lana’s success is dedication to traditional business values: excellent customer service, high-quality craftsmanship, and consistently delivering on commitments.   Lana creates unique and interesting designs. The company has flexible production and can make adjustments quickly to fill new orders. Lana’s marketing service has qualified specialists with good customer service skills. The company employs highly qualified specialists to create handmade products with unique designs. The company has mastered a full woodworking cycle, from lumber to the finished product. The company has developed its own methods for drying and sawing wood. Valuable and rare types of wood are used. Branch: Furniture see more Aliot, Ltd. Purposes of company: Export Company description: Aliot, Ltd has been active in the Ukrainian furniture market since 1999. Aliot is a professional manufacturer of interior furniture for offices and homes. The distinguishing feature of this company’s production is a harmonious combination of functionality and aesthetics together with reasonable prices. Aliot’s specialists work with European equipment that enables them to produce high-quality modern furniture. The aim of the company is to perfect and develop the furniture industry in order to satisfy the growing requirements of their customers and partners. A combination of competent marketing policies and a team of professionals with a high level of technical training and practical skills ensure the constant development of the Aliot company. Branch: Furniture see more