Ukraine's economy records major growth (02/03/02)

Ukraine's economy records major growth

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Ukraine's economy expanded at a 9 percent clip in 2001, making it the second fastest growing economy in the CIS region after Kazakstan.

Numbers released by the Ministry of Statistics and published in the government newspaper, Uriadovyi Kurier, on January 24 show that Ukraine's industrial and agricultural production were sharply up in 2001 over the previous year. Only Kazakstan's economy, with 12 percent GDP growth, grew more quickly. By comparison, Russia, Ukraine's northeastern neighbor and the largest economy of the region, experienced growth at about a 6 percent rate.

The strong rise in economic indicators coupled with an inflation rate for 2001 of 6.1 percent - the first time in a decade that inflation was held to single digits - may have given Ukraine the economic turnaround it has long awaited. In fact J.P. Morgan, the respected banking and investment house, announced on January 8 that Ukraine was among the most investment-attractive countries in 2001, having returned a 57.1 percent profit for investors, reported Interfax-Ukraine.

Economic performance in the Ukrainian manufacturing sector was particularly strong in 2001. The sector witnessed an upturn of 14.2 percent, with growth especially vibrant in the first six months, when industry expanded at a 17.4 percent rate. It was the second straight year of strong industrial expansion for the country, which experienced 12.4 percent industrial growth in 2000.

Slowed global economic growth in the second half of 2001, and especially after the events of September 11, affected the final industrial production numbers in Ukraine and resulted in second-half expansion diminishing to 9.5 percent. Fourth-quarter growth was particularly weak, but within expected projections, with the November numbers showing 7.8 percent growth and the December rate slipping to 1.8 percent.

The furniture industry led the way in the manufacturing sector with an increase of 28 percent. Machine building, which saw an 18.8 gain in production, came second, followed by the paper industry, which rose by 18.2 percent. Next came food production at 18.2 percent, followed by consumer goods manufacturing at 13.8 percent.

Metal manufacturing increased slightly, at 4.9 percent, but showed a marked decline in the second half of the year. The coal industry realized a 3.3 percent net gain in production for the year.

The agricultural sector had its strongest year in at least a decade and some say in 20 years, experiencing an overall 9.9 percent surge in production. Agricultural experts attribute the increases to a 7.7 percent increase in yields per hectare, due in part to ideal weather conditions last year.

The grain harvest was the strongest since independence, with Ukrainian farmers collecting 39.7 million tons - an increase of more than 62 percent over 2000. The wheat harvest more than doubled over 2000, while the barley yield was up by 48 percent and oats by 26.6 percent. Only the corn crop was a disappointment, showing a 5.5 percent yield reduction.

In non-grain related agricultural production, tobacco topped the list with an 18 percent increase over 2000 with sugar beets following at 17 percent.

While dairy production saw a 6 percent increase, the meat sector fell by 11 percent, which experts said was caused by a depletion of cattle stocks in the country. Poultry was in much better shape and experienced 10 percent growth.

Over all, the number of private farms in the country grew by 3,200 giving Ukraine a total of 41,600 by the end of the year. Each farm averaged 62 hectares of land.

The state of Ukraine's ever more healthy economy may also finally have become more evident to average citizens, who still complain that, while the numbers look good on paper, few see tangible evidence of the improvement in their daily lives. Ukraine's Vice Prime Minister of the Economy Vasyl Rohovyi said on January 18 that the real income of Ukrainians increased in 2001, which he explained was the result of the improved economic performance that allowed the government to increase the amount of wages and salaries paid out in 2001 by about 25 percent.

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