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The Ukraine is an open, little diversified, yet strong economy in need of modernization. The Ukrainian economy shrank by a staggering 7 percent in 2014 mainly due to the impact of the ongoing fighting in the east of the country. Also, the outlook remains bleak for the current financial year with a further estimated decline of 9%.
After the collapse of the centrally planned economy in the early 90s, the former state assets were privatized quickly. This lead to the formation of a group of oligarch who continues to hold a considerable influence on the country’s economic policy in several ways. At the same time, however, essential parts of the economy still remain in the hands of the state.
The east of the country is the industrial center of Ukraine, the West is predominantly rural. The main industries are the metallurgical and chemical industry, agriculture and food industry and mechanical engineering.
The Ukraine is a strongly export-oriented economy. Exports account for up to 40 percent of the country’s GDP (gross domestic product). They mainly consist of raw and semi-finished goods (including agricultural products). Since 2008, Ukraine has been a member of the WTO (World Trade Organization). In addition, the Association Agreement with the EU includes a comprehensive free trade agreement. The main trading partners of Ukraine are Cyprus, Germany, the Netherlands, Russia, Austria and Great Britain.
Why invest in Ukraine?
The Ukrainian industry is suffering from low competitiveness due to outdated equipment and high energy consumption. However, Ukrainian economy continues to hold a number of advantages for foreign investors:
- It has a large domestic market at 45.6 million people, which retains demand for quality consumer goods and services.
- The country has some sophisticated niche sectors such as aviation and rocket production that are seldom seen at such a scale in the European market.
- Ukraine has geographical proximity to key markets in the EU as well as the Eastern European countries.
- The country has good natural conditions for agriculture, allowing it to have one of the best agricultural throughput among major European countries.
- Ukraine also has comparatively low level of wages for both skilled and unskilled labor than other European countries.