International Monetary Fund data from 2017 shows that Ukraine is the 63rd-largest economy based on nominal gross domestic product (GDP), which evaluates market prices, and 50th-largest economy based on purchasing power parity (PPP), which compares the prices of like consumer goods among countries.
With a population of around 42 million, Ukraine ranks 131st in the world based on nominal GDP per capita and 114th based on GDP by PPP per capita. These measures divide nominal GDP and GDP by PPP by the country’s population.
What should I know about nominal GDP and PPP?Among the multiple ways that economists measure a country’s economic strength, nominal GDP and PPP are two of the most common.
Nominal GDP is based on official government estimates and depends on exchange rates between two countries, typically using the US dollar for one of the denominations. It’s useful for measuring financial flows between countries. But because it doesn’t consider differences in cost of living, it can distort per capita income estimates.
PPP, on the other hand, considers the relative cost of local goods, services and inflation rates — all factors considered to reflect a country’s domestic market. Because PPP compares the costs of a common “basket of goods” — some 3,000 consumer goods that include food, fuel and insurance — it’s considered a more ideal way to project per capita income projections and gauge poverty thresholds.
Ukraine’s official currency is the Ukrainian hryvnia (UAH). This currency has recently fluctuated between 25.9 and 26.5 UAH against the US dollar.
Ukraine is an emerging free market economy. Industry accounted for 26% of GDP in 2012 and employed 26% of the workforce. Major industries include mining and mineral production, iron and steel, chemicals, military arms, fuel and energy, automobile production, aircraft and aerospace production and shipbuilding.
Agriculture accounted for around 10% of GDP in 2012 and employed 5.6% of the workforce. Wheat, corn, sugar, sunflower oil, nuts and honey are among Ukraine’s top agricultural products. Industrial production severely affected the country’s conflicts with Russia. As a result, agricultural products are now Ukraine’s biggest exports. Agricultural land remains publicly owned, with experts predicting that agricultural production could rise higher if farmland were privatized.
The services sector accounted for around 60% of GDP in 2012 and employed more than two-thirds of the workforce. Ukraine enjoys a reputation as a major source for IT professionals as a result of a strong scientific and educational sector.
Despite an underdeveloped tourism sector, some 23 million foreign tourists visited the country in 2012.
As of 2016, an estimated 1.5% of the population was unemployed.
Major contributors to the economy
Ukraine’s top trading partners include Russia, Turkey and China.
- Iron and steel
- Animal and vegetable fats, oils and waxes
- Ores, slag and ash
- Electrical machinery and equipment
Its major imports include:
- Mineral fuels, including oil
- Machinery, including computers
- Electrical machinery and equipment
- Plastic and plastic articles
Ukraine was known as the industrial base for the former USSR. After its separation from the USSR, the Ukrainian economy experienced a slowdown in economic growth.
Ukraine’s economy grew rapidly from 2000 until 2008, before a financial crisis in 2008 and 2009 slowed the country’s growth. After recovering in 2010, Ukraine again experienced a downturn in its economic fortunes starting in 2013 and lasting until 2015. The economic slowdown can be traced to Russia’s annexation of Crimea, which had previously belonged to Ukraine, and conflict with Russian-supported rebels in the eastern part of the country.
The economy recovered in 2016, increasing by 2.3% in that year and continuing to grow at a modest rate in 2017. Higher growth rates in the next few years are feasible, as long as the government continues with reforms to address structural defects, including providing more support for agriculture, privatizing nationalized industries and making the environment attractive to foreign investors. However, economic prospects might not be so bright if conflict in the eastern part of the country continues.