Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant, the top reasons why U.S. companies should consider exporting to this country, and other issues that affect trade, e.g., terrorism, currency devaluations, trade agreements.
Last Published: 2/1/2019
Ukraine’s economy is recovering from a deep slump.  Following a political and economic crisis in 2014-2015 and cumulative economic decline of 16 percent, Ukraine’s economy began slowly growing in 2016 with two percent year-over-year growth.  While the country’s turn-around was primarily attributable to reforms implemented by Ukraine’s first technocratic government, growth in 2016 was driven by a rebound in domestic investment activity and a modest recovery in household consumption. Going forward, analysts anticipate that domestic demand will continue to fuel economic growth of 2.5 percent in 2017 and 3.5 percent in 2018.  The biggest reason that domestic demand will lead economic growth instead of exports is Russia’s continued trade bans against Ukraine. 

In addition to undergoing drastic changes in trade relations, Ukraine’s exports continue to fall year over year due to global commodity prices and challenges in the domestic supply chain.  In March 2017, Ukraine’s government implemented new measures prohibiting trade with territories in the country’s east effectively controlled by Russian-backed separatists.  This prevents coal from traveling from the east to west and stops mineral inputs for the steel industry from reaching the non-government-controlled territory.  Against a backdrop of falling exports, Ukraine’s current account deficit increased from 0.1 percent of GDP in 2015 to 3.5 percent of GDP in 2016.  All major Ukrainian exports dropped in 2016 except agricultural exports. 

Despite its low economic growth and falling exports, Ukraine’s economy has several bright spots, most notably agriculture, which grew 6.1 percent year-over-year in 2016.  Last year Ukraine harvested 66 million tons of grain, which was the country’s record high.  Ukraine ranks among the world’s top producers of grain crops including wheat, corn, and barley.  In 2016, Ukraine’s sugar exports also reached a 15-year high.  Barring weather issues, 2017 harvests will likely set new records, and agriculture will continue to support the economy.  Stable agricultural growth presents significant opportunities for U.S. exporters of agricultural machinery, as well as other inputs like seeds and fertilizers.

Ukraine’s recent economic recovery and macroeconomic stabilization are supported heavily by the International Monetary Fund (IMF).  In March 2015, the IMF opened a four-year Extended Fund Facility (EFF) program for Ukraine totaling about $17 billion.  Thanks to the country’s progress on fiscal consolidation and banking and energy sector reforms in 2015 and 2016, Ukraine is currently on track to receive its fifth tranche of assistance under this program in 2017.  Future IMF assistance will depend on additional reforms, including pension reform, land reform, and additional steps to fight corruption.  According to the IMF, per capita GDP in Ukraine is still very low—just 20 percent of the EU average and the second lowest level of all Central and Eastern European countries. Faster, sustainable, and inclusive growth is needed to recover lost ground and improve living standards.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.

Ukraine Trade Development and Promotion