IV. Transitional economies

Countries of the Commonwealth of Independent States (CIS) outside the CCA are facing a contraction in 2009, followed by a tentative recovery in 2010. Links with Russia (both trade and remittances) have compounded the effects of the global recession, and GDP growth is projected to be only 2.1 percent in the CIS region in 2010. The CIS (Commonwealth of Independent States) comprises Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, the Kyrgyz Republic, Moldova, Mongolia, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. Georgia and Mongolia, which are not members of the CIS, are included in this group for reasons of geography and similarities in economic structure.

Ukraine

Ukraine was the second most economically powerful state of undivided U.S.S.R. after Russia. Ukraine’s fertile black soil allows cultivation of food grains, vegetables, and sugar beets. Heavy machineries and specialized industrial apparatus are the primary industries of Ukraine. After its independence in 1991, Ukraine attempted privatization of its economic activities which were resisted from within.

Ukraine being heavily dependent on Russia for its requirement of gas and oil cannot come out of shadow economy easily. Though the government of Ukraine is attempting to come out of Russia’s influence with various fiscal and customs procedures, it is a difficult exercise as nearly 75% of Ukraine’s requirement of oil and gas is met by Russia. In spite of the political tensions, Ukraine has been able to maintain a buoyant economy because of the high price it demands for its steel in the global market.

Economic activities of Ukraine

Coal, iron ore, manganese, magnesium, mercury, nickel, titanium, graphite, kaolin and sulfur are the natural resources of Ukraine. Food grain, sugar beets, vegetables and sunflower seeds are the major agricultural products. Dairy products and beef processing are other important agriculture based activities. Mining is a major primary economic activity in Ukraine. Agriculture accounts for approximately 9% of GDP and provides employment to nearly 25% of occupied labor force.

The industrial sector is dominated by iron and steel industry. Petroleum products, power generation, heavy machineries, transport equipments, chemicals, and food processing are other major manufacturing industries. This industrial or secondary sector employs about 20% of the available labor force, and contributes over 32% towards GDP.

The services sector made up of banking, tourism, real estate, education, and transport and communication contributes nearly 59% towards GDP, and engages around 55% of the labor force.

Ukraine was the second most economically powerful state of undivided U.S.S.R. after Russia. Ukraine’s fertile black soil allows cultivation of food grains, vegetables, and sugar beets. Heavy machineries and specialized industrial apparatus are the primary industries of Ukraine. After its independence in 1991, Ukraine attempted privatization of its economic activities which were resisted from within.

Ukraine being heavily dependent on Russia for its requirement of gas and oil cannot come out of shadow economy easily. Though the government of Ukraine is attempting to come out of Russia’s influence with various fiscal and customs procedures, it is a difficult exercise as nearly 75% of Ukraine’s requirement of oil and gas is met by Russia. In spite of the political tensions, Ukraine has been able to maintain a buoyant economy because of the high price it demands for its steel in the global market.