The level of shadow economy dropped in Ukraine to 28% of GDP, a recent update from the Ministry of Economics shows.
Shadow economy in Ukraine dropped below 30%
Only a few years ago Ukraine was one of the world leaders in the ratings by the share of shadow economy (46%), but a recent update by the Ministry of Economics shows that in 2019 the numbers dropped to 28%, Finance.ua reported. It’s 3% lower than in 2018.
At the same time, there are challenges that need to be overcome in order to achieve higher transparency of economics.
The report highlighted the following areas:
- Low level of protection of private property. For instance, in the global competiveness index of 2019, the effectiveness of Ukrainian government and social services was only rated at #104 out of 141 countries. The same rating placed Ukraine at #128 by the level of protection of ownership rights and #118 in the intellectual property.
- Inadequate court system. This includes low level of independence of the courts (#105) and therefore low trust in the system. The effectiveness of the court system is rated at #103.
- High level of corruption. The sentiment of how people perceive corruption in the country is improving, but slowly.
- Instability of the financial system. Banks still have a high share of bad credits: 55% as on 1 January 2020.
- Some territories aren’t controlled by the government (Donetsk, Luhansk), which creates problems with contraband etc.
Ernst & Young estimated the size of the shadow economy in Ukraine as one quarter of GDP, or 846 billion hryvnia.
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