UKRAINE
Economy
Economy
Cities in UKRAINE
| Kyiv |
Economy
General
The Ukrainian republic was the most important economic factor of the former Soviet Union after Russia. Its fertile black earth generated more than a quarter of Soviet agricultural production and its farms produced significant amounts of meat, milk , grain and vegetables for export to other republics. Diversified heavy industry and raw materials for manufacturing and mining were also important within the former Soviet Union. Shortly after independence in August 1991, the Ukrainian government liberalized most prices and provided a legal framework for privatization. Despite this, by 2009 the economy had shrunk to less than 40% of its 1991 level.
Ukraine's dependence on Russia for energy supplies and the absence of major structural reforms have made the Ukrainian economy vulnerable to external shocks. Ukraine depends on imports for about three-fourths of its annual oil and natural gas needs and for 100% of its nuclear fuel needs. After a two-week dispute over gas supplies, Russia is demanding that gas prices be raised to" world" levels. The IMF encourages Ukraine to increase the pace and scope of reforms to accelerate economic growth. Improvements are needed particularly in the fight against corruption. Ukraine's economy grew briskly despite political turmoil between the prime minister and president until mid-2008.
The economy shrank nearly 15% in 2009, one of the worst economic performances in the world. In April 2010, Ukraine negotiated a price discount on Russian gas supplies in exchange for extending Russia's lease of its naval base in Crimea. The movement toward an association agreement with the European Union came under fire with President Yanukovych's decision not to sign the treaty in November 2013. In response, on December 17, 2013, President Yanukovych and President Putin decided on a financial aid package with $15 billion in loans and lower gas prices. However, due to the end of the Yanukovych government in February 2014, Russia renounced further funding. With the formation of an interim government in late February 2014, the international community began efforts to stabilize Ukraine's economy. However, Russia's incursion into Crimea and the Donbas region caused a new period of instability.
Some current figures: Economic growth is 2.5% (2017). GDP per capita in Ukraine is $8,800 (2013). Ukraine is still an industrial country, as almost 30% of GDP is earned in industry. Agriculture contributes over 10% and services almost 60%.
Agriculture
The republic was among the most fertile areas of the former Soviet Union and was therefore long known as the granary of Europe. At the time of Soviet rule, a quarter of all agricultural products came from Ukraine, but after independence agricultural production fell to about 50% of its former level. From 1999 onwards, an upward trend can be seen again.
In 2017, agriculture employs 5.8% of the labor force, while it contributes 12.2% to GDP. Almost 42 million ha are used as arable land, which is two-thirds of the country. The main arable products are wheat, buckwheat, corn, sugar beets, sunflowers, cotton, flax, tobacco, soy, hops, rubber. For horticulture, the Soviet Union is still an important market. The favorable climate in the south of the country provides good production opportunities for fruits and vegetables.
Animal husbandry (cattle, pigs, sheep and goats) is again of increasing importance.
Mining
Ukraine has a huge stockpile of minerals, including the largest titanium deposit in the world, the third largest iron ore deposit and 30% of the world's manganese ore deposit. In addition, Ukraine has reserves of uranium, mercury, nickel, mercury, lime, salt, sulfur, graphite and some gold.
Coal still accounts for about 40% of domestic energy production. About 400,000 miners still work in more than 200 mines, mainly around Donetsk and in the Donbas region. Poor maintenance and dangerous production methods kill miners.
More than 75% of natural gas comes from abroad, especially from Russia and increasingly from Turkmenistan. Ukraine is an important transit country for both oil and gas.
Pipelines for oil and gas have a total length of about 14,000 km. Natural gas pipelines leave from Dashava to Kyiv, St. Petersburg and Moscow. The "Friendship Pipeline" transports petroleum through western Ukraine from Almetyevsk via Uzhgorod to the Danube countries.
Industry general
The industry employs 26.5% of the labor force and provides 28.6% of GDP. (2017)
The wealth of mineral resources led to very strong industrial development early on. The iron and steel industry, the heavy machinery industry and food production are characteristic. Mechanical engineering is the largest industrial sector in Ukraine, with more than 2,500 companies and over 1.5 million employees. Due to the low quality of Ukrainian machinery, many machines are still imported from Western Europe, Asia, Canada and the United States.
The iron and steel industry is concentrated primarily in the Donbass; 350 km west, the iron ore deposits of Krivoj Rog have been decisive for the heavy industry established here. Halfway between the two areas, on the Dnepr, a concentration of metallurgical enterprises arose in Dneprodzerzhinsk, Dnepropetrovsk, and Nikopol. More recent are the blast furnaces of Odessa and Zhadnov, fed by the ores of Kerch.
Heavy machinery industry, apart from those already mentioned, is located in Kyiv, Kharkov and Lvov. Heavy industry does cause Ukraine to be among the countries with the highest industrial pollution in the world. The Chernobil disaster in 1986 is still causing problems.
Also notable is the concentration of sugar mills in the forest steppe belt and of wood processing industries in the north and in the Carpathians.
Automobiles and shipbuilding
The production of all kinds of transportation equipment has grown in recent years. In addition to many local brands, more and more foreign brands are being produced, including Volkswagen, Daewoo and Mercedes-Benz.
The Ukrainian shipbuilding industry has always been an important industry. Its location on the Black Sea is certainly to blame. The shipyards produce a variety of vessels, including warships, oil tankers, pleasure yachts, tugs and submarines. This sector also suffered greatly from the collapse of the Soviet Union, which largely eliminated a large sales market. But domestic demand has also fallen sharply, and the industry is now almost entirely dependent on foreign orders. Through tax incentives they try to interest foreign companies to invest.
Chemicals
The chemical industry is fairly widespread. As part of the Soviet Union, Ukraine had been one of the main producers of chemical products, but at present it is highly dependent for both procurement of raw materials and marketing of products. Western Europe has only a small share in the export and import of chemical products. Currently, Ukraine is 60% dependent on imports.
Paper industry
The Ukrainian market for paper and papermaking products has enormous potential, although consumption per person is quite low at just over 15 kilograms per year. Ukraine is more than 50% dependent on imports, much of which is imported illegally. A major problem is the shortage of cellulose.
Especially for writing and printing paper and wallpaper one is dependent on foreign countries. The country has traditionally specialized in the production of special and technical papers.
Textiles
At the time of the Soviet Union, 50% of textile production took place in Ukraine. Since independence, production has fallen very sharply and the volume of sales is estimated at around 350 million euros per year. Second hand clothing is very important in the Ukrainian market and the textile sector is mainly present in Western Ukraine. 80% of the imported second-hand clothing comes from Western Europe.
Energy
Due to its highly antiquated industry, Ukraine's energy consumption is more than ten times higher than some Western countries.
For energy supply, in addition to dozens of thermal, many hydroelectric power plants in the Dnieper River are used. All these power plants provide almost half of the energy production.
The nuclear power plants near Kyiv, Lvov and in southern Ukraine (Crimea) provide about 45% of energy production. A low point in Ukraine's history was the accident at the Chernobyl nuclear power plant in 1986. A fire broke out in one of the four reactors, and a cloud of radioactive dust spread over Northern and Eastern Europe. The disaster killed 31 people directly, in addition, more than 100,000 people may have died since then from disease and radiation.
Telecommunication and internet
At the end of 2002, the total number of fixed and mobile telephone connections exceeded 14 million, which is approximately 30 telephone connections per 100 inhabitants In 1991, the market penetration was only 14.6 telephone connections per 100 inhabitants. The large increase is mainly due to the spectacular growth of cell phone users.
The now low number of Internet users is growing steadily. Because many Ukrainians do not yet have access to the Internet, doing business via the Internet is also less developed. Moreover, there are still few sites where products can be ordered using a credit card. For the time being, most company websites are used to advertise.
Trade
Ukraine's main trading partner in 2017 was still Russia. It remains to be seen how this develops given the current crisis between these countries. The value of exports was $40 billion in 2017. The European Union, Turkey and Egypt are important export partners in addition to Russia. The value of imports was $49 billion in 2017. The European Union and China and Egypt are major import partners in addition to Russia.
Traffic
The traffic network is well developed. The paved road network has a total length of 172,300 km, over which more than a billion tons of freight are transported annually.
The length of the railroad network is 22,670 km and the transport of goods (300 million kilograms per year) occupies an important place. In terms of size, Ukrainian railroads rank fourth in the world, after Russia, the United States and Canada.
Of the inland waterways (4500 km), the Dnieper is particularly important. Freight transport by sea is also important for the Ukrainian economy; essential here is that both the Black Sea and the Sea of Azov remain ice-free in winter. The main ports are Odessa, Nikolaev and Mariupol.
Sources
Bassis, V. / Ukraine
Marshall Cavendish
Corona, L. / Ukraine
Lucent Books
Hove, P. ten / Schets van Oekraïne
Stichting Platform Samenwerking Nederland-Oekraïne
Oekraïne
Minbuza Stichting Platform Samenwerking Nederland-Oekraïne
Otfinoski, S. / Ukraine
Facts on File
CIA - World Factbook
BBC - Country Profiles
Last updated March 2024Copyright: Team The World of Info