Ukraine Ukraine is a country in Eastern Europe. It is the List of European countries by area, second-largest country in Europe after Russia, which Russia–Ukraine border, borders it to the east and northeast. Ukraine also borders Belarus to the nor ...

was hit heavily by the

Great Recession The Great Recession was a period of market decline in economies around the world that occurred from late 2007 to mid-2009.

, the

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expected Ukraine's economy to shrink 15% in 2009 with inflation having been 16.4%.World Bank worsens outlook for fall in Ukraine's GDP to 9%, and inflation to 16.4%
,

Interfax-Ukraine Interfax-Ukraine () is a Ukrainian news agency. Founded in 1992, the company publishes in Ukrainian, Russian, English and German. The company owns a 50-seat press centre. The staff of the agency is 105 people (as of the end of February 2022) ...

(7 April 2009) The deficit of Ukraine's foreign trade in goods and services January through September 2009 was estimated at $1.08 billion, which was 9.5 times down on the same period in 2008, export of goods over the period decreased by 48.7%, to $27.478 billion, while imports fell by 53.5%, to $31.570 billion; export of services dropped by 23.2%, to $6.841 billion, while imports were down by 19.9%, to $3.829 billion (the deficit of Ukraine's foreign trade over the first nine months of 2008 was estimated at $10.284 billion, which was 2.7 times up on the same period of 2007). According to a forecast by the State Employment Centre, unemployment in Ukraine would triple to 9% in 2009 (there was 3% unemployment at the end of 2008), which would mean about 3 million people would apply for employment services. In September 2009, the official level of unemployment was 1.9%. 95% of the population of Ukraine had felt the influence of the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

; in July 2009 21% of them stated that "The crisis has a catastrophic impact on me and my family", this figure dropped to 17% in October 2009.Ukrainians blame Yuschenko and Tymoshenko for creating economic mess

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(20 October 2009) Actual year-on-year wages in Ukraine fell in October 2009 by 10.9%, while in October 2008, it grew by 4.8% year-over-year according to the State Statistics Committee of Ukraine. The

real income Real income is the income of individuals or nations after adjusting for inflation. It is calculated by dividing nominal income by the price level. Real variables such as real income and real GDP are variables that are measured in physical ...

s for

Ukrainians Ukrainians (, ) are an East Slavs, East Slavic ethnic group native to Ukraine. Their native tongue is Ukrainian language, Ukrainian, and the majority adhere to Eastern Orthodox Church, Eastern Orthodoxy, forming the List of contemporary eth ...

in 2009 fell down 8.5% while the nominal income went up 6.2%. The Ukrainian economy shrank 15 percent in 2009. The second Tymoshenko Government had predicted GDP growth of 0.4% in 2009 and a slowdown in inflation to 9.5% (also in 2009), although the overwhelming majority of economists considered this forecast to be excessively optimistic. The Ukrainian economy recovered in the first quarter of 2010.Ukraine - Macroeconomic situation - April 2010

UNIAN The Ukrainian Independent Information Agency of News () is a Kyiv-based Ukraine, Ukrainian news agency. It produces and provides political, business and financial information, and a photo reporting service. As of October 2022, it was the most v ...

(19 May 2010)

Reasons for crisis

Analysts say the reasons for the crises were slumping steel prices, local banking problems and the cutting of Russian gas supply of January 2009.Trade in Ukraine hryvnia drying up amid crisis

(19 December 2008) This made key industries such as metallurgy and machine building lay off workers, and real wages started to fall for the first time in a decade. In 2008 the hryvnia dropped 38% against the

US dollar The United States dollar (symbol: $; currency code: USD) is the official currency of the United States and several other countries. The Coinage Act of 1792 introduced the U.S. dollar at par with the Spanish silver dollar, divided it int ...

, eclipsed only by the Icelandic krona and the Seychelles rupee. Since many loans and mortgages were issued in dollars and most Ukrainians are paid in hryvnias (Ukraine's currency), they had to buy dollars with the weak hryvnya, and so they were paying back much more on the loans than they had expected. From December 2008 till mid-May 2009 Ukrainian banks were not allowed to grant requests for early withdrawals of

bank deposits A deposit account is a bank account maintained by a financial institution in which a customer can deposit and withdraw money. Deposit accounts can be savings accounts, current accounts or any of several other types of accounts explained below. ...

. As of September 2009 financial analysts predict a recovery of the hryvnia. According to David Heslam of

Fitch ratings Fitch Ratings Inc. is an American credit rating agency. It is one of the three nationally recognized statistical rating organizations (NRSRO) designated by the U.S. Securities and Exchange Commission and is considered as being one of the " Bi ...

"At the root of the problem is Ukraine's inconsistent

macroeconomic Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output/ GDP ...

policy framework, as the authorities are aiming to defend the

exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...

while avoiding necessary fiscal tightening in the absence of adequate sources of non-monetary financing". In November 2009, Ukraine's Minister of Economics Bohdan Danylyshyn stated that in his view the "permanent conflicts" and "lack of understanding" between the National Bank of Ukraine (NBU) and the Cabinet of Ministers was one of major factors of the deep fall of the Ukrainian GDP in 2009, as in his view the conflicts affected the efficiency of the anti-crisis policies of Ukraine (he also insists government should get involved in NBU's activity). Asked in August and October 2009 "Who bears the most responsibility for the difficult socioeconomic situation in Ukraine?" about a half of all Ukrainians polled (47%) answered

President of Ukraine The president of Ukraine (, ) is the head of state of Ukraine. The president represents the nation in international relations, administers the foreign political activity of the state, conducts negotiations and concludes international treaties. ...

Viktor Yushchenko Viktor Andriiovych Yushchenko (, ; born 23 February 1954) is a Ukrainian politician who was the third president of Ukraine from 23 January 2005 to 25 February 2010. He aimed to orient Ukraine towards Western world, the West, European Union, and N ...

, and 22% blamed

Prime Minister of Ukraine The prime minister of Ukraine (, , ) is the head of government of Ukraine. The prime minister presides over the government of Ukraine, Cabinet of Ministers of Ukraine, which is the highest body of the executive branch of the government of Ukrain ...

Yulia Tymoshenko Yulia Volodymyrivna Tymoshenko ( Hrihyan born 27 November 1960) is a Ukrainian politician, who served as Prime Minister of Ukraine in 2005, and again from 2007 until 2010; the first and only woman in Ukraine to hold that position. She has been ...

, while 17% of the respondents thought that the

Verkhovna Rada The Verkhovna Rada ( ; VR), officially the Verkhovna Rada of Ukraine, is the unicameralism, unicameral parliament of Ukraine. It consists of 450 Deputy (legislator), deputies presided over by a speaker. The Verkhovna Rada meets in the Verkhovn ...

was also responsible for the lack of progress in solving economic problems.

Crises per year

2008

The share of problem loans in bank portfolios grew to 10.3 percent by 11 December 2008 and is continuing to grow. Banks have all but stopped issuing loans, and clients have hurried to withdraw deposits. In October 2008, the National Bank of Ukraine introduced a moratorium on withdrawals ahead of schedule.Hard Times for Ukrainian Banks, Central Bank Chairman Under Fire
The Jamestown Foundation (17 December 2008) Industrial output in November 2008 tumbled 28.6 percent, following a 19.8 decline in October 2008. Steel production slumped 48.8 percent,

oil refining An oil refinery or petroleum refinery is an industrial processes, industrial process Factory, plant where petroleum (crude oil) is transformed and refining, refined into products such as gasoline (petrol), diesel fuel, Bitumen, asphalt base, ...

and chemical output fell 35.2 percent and machine building by 38.8 percent. Ukraine's economy shrunk 14.4 percent year-on-year in November 2008. Statistical data showed the gross domestic product (GDP) growth slowed to 3.6 percent in January–November compared to 5.8 percent in January–October. Ukraine's Economy Ministry expects the economy to grow 3.5-4.0 percent in 2008. The Hryvnia also lost value. According to a poll (held 25 November through 5 December 2008) by the Horshenin Institute of Management Problems about 79% of those polled suffered from rise in prices, about 29% from delays in payment of salaries. More than some 20% have suffered from reduction of salaries. In the families of some 14.8% somebody lost their job, and some 6% said their enterprise shut down. A total of 90.8% of those polled described their financial state as "making both ends meet" and 83.1% said they are short of money for food. Only 2.4% of Ukrainians said they were not hit by the economic crisis at all. Mid-December 2008 the

International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...

(IMF) has lowered the forecast for Ukraine's GDP in 2009 from a 2.5% growth rate to a 5% decline,IMF Lowers Forecast For Ukraine's 2009 GDP Growth Rate From 2.5% To -5%
, Ukrainian News Agency (17 December 2008) the same day the Cabinet of Ministers worsened the GDP growth forecast to 0.4% from 6% for 2009.Cabinet Worsens GDP Growth Forecast To 0.4% From 6% For 2009
, Ukrainian News Agency (17 December 2008) In November 2008, the IMF approved a stand-by loan program for Ukraine to the tune of $16.5

billion Billion is a word for a large number, and it has two distinct definitions: * 1,000,000,000, i.e. one thousand million, or (ten to the ninth power), as defined on the short scale. This is now the most common sense of the word in all varieties of ...

. A second one worth $1.87 billion might be granted in February 2009. In November 2008, the official unemployment rate increased by 0.4 percent to 2.3 (Previously 1.9% in September), the State Statistics Committee said that as of 1 December 2008, it registered 640,000 unemployed people.

2009

Ukraine's banking system recorded losses of ₴7 billion (UAH) ($909 million) in the first quarter of 2009 compared to a profit of ₴2.1 billion in the same period a year ago, according to a central bank report of 22 April 2009. In April 2009 the IMF forecast an 8.0 percent shrink of the Ukrainian economy in 2009 and a 1.0 percent grow in 2010. In Mid-April 2009, Ceyla Pazarbasioglu, the IMF mission chief in Ukraine, stated that there were a number of encouraging signs that Ukraine's economy had started to adjust to the global crisis. According to Olena Belan, analyst at Dragon Capital, "that is a good signal for investors, showing that Ukraine is taking anti-crisis measures and the economic situation is under control."

Foreign direct investment A foreign direct investment (FDI) is an ownership stake in a company, made by a foreign investor, company, or government from another country. More specifically, it describes a controlling ownership an asset in one country by an entity based i ...

did plunge 66% (to $2.7 billion) in the first half of 2009. On 18 May 2009 Ukraine's State Statistics Committee reported that the deficit of Ukraine's foreign trade in the first quarter of 2009 was estimated at $419.7 million, which was 9 times down on the same period the previous year. The Ukrainian state became the ''de facto'' owner of Ukrhazbank (84.21% after investing ₴3.2 billion), Rodovid Bank (99.97% after investing ₴2.809 billion) and Bank Kyiv (99.93% after investing ₴3.563 billion) early June 2009. The industrial output of Ukraine in the period January–August 2009 shrank by 29.6% compared to the same period in 2008. The fall in Ukraine's industrial output slowed to 26.7% in July 2009 compared to July 2008, compared to a fall of 27.5% in June and 31.8% in April and May 2009 (compared to 2008 again). On 17 September 2009 the

approved a loan for Ukraine in the amount of $400 million. According to a public opinion poll conducted by FOM-Ukraine in September/October 2009 46.2% of those polled thought that the economic situation in the country would worsen within the next few months, while 35% stated that the economic situation in Ukraine would remain unchanged and 8% thought the situation would improve. On 1 November 2009 the

(IMF) warned that it could cut financial assistance to Ukraine; managing director of the IMF Dominique Strauss-Kahn stated he was “very worried” with

President President most commonly refers to: *President (corporate title) * President (education), a leader of a college or university *President (government title) President may also refer to: Arts and entertainment Film and television *'' Præsident ...

’s decision to sign a bill adopting wage and pension increases.

Prime Minister A prime minister or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. A prime minister is not the head of state, but r ...

accused Yushchenko and other candidate for the 2010 Ukrainian presidential election of backing the increase to sabotage her

government A government is the system or group of people governing an organized community, generally a State (polity), state. In the case of its broad associative definition, government normally consists of legislature, executive (government), execu ...

and thereby undercutting her presidential bid. In late November 2009, acting vice governor of the National Bank of Ukraine Vasyl Pasichnyk forecasted no mass bankruptcies in the Ukrainian banking sector.

2010

Ukraine's total foreign debt (state and corporate) had reached 93.5% of the 912.563 billion Hryvnya GDP in March 2010;Ukraine's gross foreign debt reaches 93.5% of gross domestic product

(17 March 2010) late February 2010 the Ukrainian Finance Ministry had reported that the country's total state debt by early 2010 was to 32.9% of the GDP.

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upgraded Ukraine's rating the same day. 18 March 2010 the National Bank of Ukraine stated the total external debt in Ukraine increased 2.3% to $103.973 billion in 2009, and it considered a 4% GDP growth realistic for 2010 the same day.National Bank of Ukraine considers 4% GDP growth realistic for 20

(18 March 2010) The Ukrainian economy recovered in the first quarter of 2010 due to stronger-than-expected growth in the global economy, driven primarily by emerging Asia and Latin America, larger social transfers to the population approved in the 2010 budget law and a lower price for imported natural gas (due to the 2010 Ukrainian–Russian Naval Base for Natural Gas treaty).

References

{{DEFAULTSORT:2008-2009 Ukrainian financial crisis 2008 in Ukraine 2009 in Ukraine

Economic history of Ukraine