Economic Overview
The world
crisis since 2008 had an enormous impact on the economic situation in Ukraine.
The recession in developed economies was accompanied by a deterioration in
investment capital and a decline in construction starts. This, in turn, caused
prices for metal products and machinery to collapse. Together, this had an
adverse effect on export-oriented industries and industries directly or
indirectly tied to exports. Still, as of 2013, Ukraine’s economy is rapidly recovering.
Today,
Ukraine is the world’s fifth largest steel producer. Deteriorating sales volumes finally forced
Ukraine’s steel industry to lower its ex-works prices. The differential between
domestic and export figures has narrowed, but it remains a controversial issue
for customers. Still, according to the World Steel Association, Ukraine
produced 35.6 million tonnes of steel in 2011, a 5% increase over
2010. It further boosted its sales volumes to 26mn t in 2011.
Ukraine’s
industry is on the upswing, growing 7.6% in 2011 but contracting slightly,
1.8%, in 2012. The mining industry saw a very modest 1.9% growth during
2012-2011, while the power, gas and water industries grew 2.8% and food
production inched up 1.8%.
In 2012,
machine-building enterprises continued increasing their sales volumes, reaching
UAH 140.6 billion or nearly US $18bn by the end of the year. The sector share
of total volume sold by the domestic machine-building industry was 8.7% in
February 2013.
The volume
of retail turnover in Ukraine grew by 15.9% in 2012, while domestic transport
companies carried 3.2% more passengers and 5.8% more cargo than in 2011.
After the
economic collapse in late 2008, 2009 was even more challenging for the
residential sector. The situation started to improve in 2010, and by 2012 10.7
mn sq m of new floor space was commissioned, 5% more than was commissioned in
pre-crisis 2007. The average size of residential space completed was 98.3 sq m,
with the average for cities 91.5 sq m and the average for rural areas 135 sq m.
As of January
2012, Ukraine was the fifth largest borrower from the IMF, following Romania,
Ireland, Portugal and Greece. The IMF granted Ukraine a US $16.4bn loan in
October 2008, of which the Government has so far received $10.6bn. Payments
were suspended in late 2009, after Ukraine raised minimum wages and pensions,
contrary to IMF recommendations. On August 11, 2010, the IMF approved a
29-month US $15.1bn loan to Ukraine. However, it has since issued only the
first two tranches, because Ukraine’s Government refused to raise natural
gas rates for residential use.
Ukraine
