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In 1997, Ukraine derived 12% of its value-added from agriculture. This is relatively larger than that of other CEE economies (with the exception of Romania). Industry accounted for 40% of value-added. Services occupied the remaining 48%, which is relatively low by East European standards (though higher than in Romania). Given that one of the typical trends perceived in economic transition is a shift from agriculture and industry to services, the service sector in Ukraine should in the long run outperform other sectors of the economy and make up a higher percentage of overall GDP.
| Table : Structure of GDP: |
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| Source: World Bank’s World Development Indicators, 1999. |
Metals (especially ferrous), food, mechanical engineering and power dominate Ukraine’s industrial output, while the more consumer oriented and labor intensive textiles and apparel sector account for only 1% of industrial output even despite comparatively low labor cost. Over recent years the country’s non-ferrous metals were the most robust in their growth rates, while textiles/apparel, wood/pulp/paper and food also exhibited consistent recovery trends.
Table: Ukraine’s Industry & Services
| In current US$ millions | 1997
UAH mil | Real
%ch | 1998
UAH mil | Real
%ch | 1999
UAH mil | | Real
%ch |
| Industrial output | 73,481 | -1.8 | 82,862 | -1.5 | 107,080 | 100% | 4.3 |
Electricity | 9,500 | -2.6 | 12,182 | -0.3 | 17,476 | 16% | 6.6 |
Fuel | 8,207 | 4.5 | 9,513 | -0.7 | 12,231 | 11% | -1.3 |
Ferrous metals | 17,072 | 7.7 | 19,131 | -6.8 | 25,604 | 24% | 6.2 |
Non-ferrous metals | 1,067 | 2.7 | 1,285 | 12.4 | 2,226 | 2% | 8.9 |
Chemicals/petrochemicals | 4,816 | -0.6 | 5,359 | 0.9 | 5,677 | 5% | -1.1 |
Mechanical engineering | 11,331 | -3.6 | 12,824 | -4.5 | 14,801 | 14% | -0.8 |
Wood/pulp & paper | 1,488 | -5.1 | 1,416 | 10.4 | 2,296 | 2% | 23.6 |
Construction materials | 2,396 | -7.9 | 2,762 | 4.1 | 3,327 | 3% | -0.6 |
Textiles/apparel | 1,235 | -5.2 | 1,269 | 1.5 | 1,538 | 1% | 5.7 |
Food | 12,556 | -14.6 | 12,413 | -0.5 | 16,301 | 15% | 7.8 |
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| Construction | N/A | -11.9 | 7,662 | 2.6 | | | -10 |
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Transport/
Communications | N/A | -1.9 | 23,295 | -2.6 | | | -6 |
Source: State Statistics Committee, Flemings/SARS Consortium.
Ukraine derives the majority of its export earnings from selling primary products like metals, chemicals and agricultural commodities (over half of merchandise exports). At the same time, the majority of import spending is also centered around primary products (esp. energy and chemicals). Surplus service trade (mostly from pipeline transport of oil and gas) partially offsets the deficit in merchandise trade caused by excessive energy consumption of Ukraine’s economy. The drastic real depreciation of the local currency in 1998-99 has caused a rebalancing of Ukraine’s trade by depressing imports. For 1999, Ukraine is expected to post a surplus on its current account.
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Table. Trade Patterns.
In current US$ millions | Y1996 | | Y1997 | | %ch vs 96 | Y1998 | | %ch vs 97 |
| Current Account | - 1,185 | | - 1,335 | | 13% | - 1,190 | | -11% |
Merch exports | 15,547 | 100% | 15,418 | 100% | -1% | 13,153 | 100% | -15% |
Energy | 1,156 | 7% | 1,142 | 7% | -1% | 992 | 8% | -13% |
Metals | 4,628 | 30% | 5,904 | 38% | 28% | 5,428 | 41% | -8% |
Chemicals | 2,207 | 14% | 2,015 | 13% | -9% | 1,835 | 14% | -9% |
M.Engineering | 2,081 | 13% | 1,970 | 13% | -5% | 1,948 | 15% | -1% |
Agri/Food | 3,045 | 20% | 1,802 | 12% | -41% | 1,166 | 9% | -35% |
Other | 2,430 | 16% | 2,585 | 17% | 6% | 1,785 | 14% | -31% |
Merch imports | - 19,843 | 100% | - 19,623 | 100% | -1% | - 15,836 | 100% | -19% |
Energy | - 8,868 | 45% | - 8,280 | 42% | -7% | - 5,573 | 35% | -33% |
Metals | - 760 | 4% | - 666 | 3% | -12% | - 710 | 4% | 7% |
Chemicals | - 1,954 | 10% | - 2,151 | 11% | 10% | - 1,942 | 12% | -10% |
M.Engineering | - 2,990 | 15% | - 3,687 | 19% | 23% | - 3,394 | 21% | -8% |
Agri/Food | - 1,447 | 7% | - 898 | 5% | -38% | - 1,042 | 7% | 16% |
Other | - 3,824 | 19% | - 3,941 | 20% | 3% | - 3,174 | 20% | -19% |
Balance of Merch Trade | - 4,296 | | - 4,205 | | -2% | - 2,683 | | -36% |
Service exports | 4,799 | 100% | 4,937 | 100% | 3% | 4,226 | 100% | -14% |
Transport | 4,034 | 84% | 4,029 | 82% | 0% | 3,235 | 77% | -20% |
incl. Pipeline transit | 2,955 | 62% | 2,908 | 59% | -2% | 2,231 | 53% | -23% |
Travel | 230 | 5% | 270 | 5% | 17% | 297 | 7% | 10% |
Financial | 26 | 1% | 33 | 1% | 27% | 23 | 1% | -30% |
Communications | 125 | 3% | 114 | 2% | -9% | 99 | 2% | -13% |
Construction | 42 | 1% | 50 | 1% | 19% | 44 | 1% | -12% |
Other | 343 | 7% | 441 | 9% | 29% | 527 | 12% | 20% |
Service imports | - 1,625 | 100% | - 2,268 | 100% | 40% | - 2,472 | 100% | 9% |
Transport | - 424 | 26% | - 476 | 21% | 12% | - 501 | 20% | 5% |
Travel | - 308 | 19% | - 305 | 13% | -1% | - 321 | 13% | 5% |
Financial | - 42 | 3% | - 80 | 4% | 90% | - 94 | 4% | 18% |
Communications | - 119 | 7% | - 115 | 5% | -3% | - 124 | 5% | 8% |
Construction | - 109 | 7% | - 192 | 8% | 76% | - 218 | 9% | 14% |
Other | - 623 | 38% | - 1,100 | 49% | 77% | - 1,214 | 49% | 10% |
Balance of Service Trade | 3,174 | | 2,669 | | -16% | 1,754 | | -34% |
Income balance | - 572 | | - 644 | | 13% | - 909 | | 41% |
Transfer balance | 509 | | 845 | | 66% | 648 | | -23% |
Source: NBU, Flemings/SARS Consortium.
Source: Ministry of Economy of Ukraine, Monitoring of the Implementation of Cabinet of Ministries of Ukraine Program “Reforms for Prosperity”.
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