Flag description: two equal horizontal bands of azure (top) and
golden yellow represent grainfields under a blue sky
Economy
Economy—overview: After Russia, the Ukrainian republic was far and away the most important economic component of the former Soviet Union, producing about four times the output of the next-ranking republic. Its fertile black soil generated more than one-fourth of Soviet agricultural output, and its farms provided substantial quantities of meat, milk, grain, and vegetables to other republics. Likewise, its diversified heavy industry supplied equipment and raw materials to industrial and mining sites in other regions of the former USSR. Ukraine depends on imports of energy, especially natural gas. Shortly after the implosion of the USSR in December 1991, the Ukrainian Government liberalized most prices and erected a legal framework for privatization, but widespread resistance to reform within the government and the legislature soon stalled reform efforts and led to some backtracking. Output in 1992-98 fell to less than half the 1991 level. Loose monetary policies pushed inflation to hyperinflationary levels in late 1993. Since his election in July 1994, President KUCHMA has pushed economic reforms, maintained financial discipline, and tried to remove almost all remaining controls over prices and foreign trade. The onset of the financial crisis in Russia dashed Ukraine's hopes for its first year of economic growth in 1998 due to a sharp fall in export revenue and reduced domestic demand. Although administrative currency controls will be lifted in early 1999, they are likely to be reimposed when the hryvnia next comes under pressure. The currency is only likely to collapse further if Ukraine abandons tight monetary policies or threatens default. Despite increasing pressure from the IMF to accelerate reform, significant economic restructuring remains unlikely in 1999.
GDP: purchasing power parity—$108.5 billion (1998 est.)
GDP—real growth rate: -1.7% (1998 est.)
GDP—per capita: purchasing power parity?$2,200 (1998 est.)
GDP—composition by sector: agriculture: 14% industry: 30% services: 56% (1997 est.)
Population below poverty line: 50% (1997 est.)
Household income or consumption by percentage share: lowest 10%: 4.1% highest 10%: 20.8% (1992)
Inflation rate (consumer prices): 20% (yearend 1998 est.)