Ukraine's trade ties historically spread across the former Soviet states. More than 60% of the country's exports go mostly to Russia, Belarus and Kazakhstan, with the two former being its key import partners. Some countries like Germany, China, and Poland have been gaining importance in recent years, but so far Russia remains Ukraine's key trading partner.
Ukraine is believed to have enormous potential for the development of its agriculture because of its arable land. However, after the collapse of the Soviet Union, the sector has undergone through a severe transformation, it has also experienced a change in the structure of ownership.
In the fourth quarter of last year, the index of Ukraine's investment attractiveness measured by the European Business Association (EBA) fell to the lowest recorded level in five years.
As Ukraine's economy is going through a painful macroeconomic adjustment, domestic demand is one of the key economic indicators that are going to feel the effect. It has actually felt it already. Consumer sentiment fell sharply in the country in the first three months of this year, research firm Nielsen reported recently.
Ukraine has recently been called the most corrupt country in Eastern Europe by Transparency International, which placed it in the lowest category possible for corruption. It is believed that half of the economic activity happens in the black market, generating no tax revenue. The International Monetary Fund blames weak governance and resistance from vested interests for the failure of Ukraine's previous two IMF aid programs.
In the first four months of this year, Ukraine's budget deficit was at 1.5%, or around UAH 13 billion, the country's Finance Minister Oleksandr Shlapak said at a briefing this week.
Having accelerated from merely half a percent at the beginning of 2014 to now almost 7%, inflation is seen by many analysts as a serious issue for Ukraine's economy.
As Ukraine is facing its third recession since the global financial crisis, the country’s currency has been the world’s worst-performing one since the start of this year. The Hryvnia has been in free fall, losing more than 35% of its value against the dollar in 2014.
Ukraine has been facing quite a few major economic and financial difficulties resulting from the ongoing crisis. The first and foremost problem is a significant slowdown caused by the economic disruption. In the first quarter alone, Ukraine’s economy contracted by 1% year-on-year, which is though a better result than the 2.8% drop expected by some analysts.
As Ukraine happens to be one of only two former Soviet Union republics out of the entire 15 states that have yet to reach their 1991 level, it still needs a pile of money to make both ends meet. Its state debt is likely to reach more than half of the country's GDP in 2014, according to the Finance Ministry.