Ukraine remains the poorest country in Europe, according to the latest statistics by the IMF.
Disappointing statistics
According to the International Monetary Fund, Ukraine is still the poorest country in Europe, as per 2017 data. Even Moldova is in a better shape economically and has shown a significant economic growth.
Of course, Ukraine is not the last contender on the list worldwide. There are some countries that are doing worse financially, but they are not in Europe, KP.ua reported.
“In the new IMF report on GDP per capita, Moldova bypassed us, and we bypassed Papua New Guinea,” announced Vladimir Kompaniets, who is a manager of a private investment fund in the US stock market.
- Now Moldova is #133 in the ranking with GDP at USD 2,694 per capita.
- Ukraine’s rank is #134 with $2,656.
Wages in Moldova also turned out to be higher than in Ukraine. In the second quarter of 2018, the average wage in Moldova was $375 (6,370 lei).
At the same time, the average Ukrainian wage was $325 (8,529 hryvnia).
“By the size of the average salary, Ukraine also takes the last place in Europe,” Kompaniets added.
Opinions
But not all experts agree with IMF’s evaluations. When calculating GDP per capita, many Ukrainians, who do not live permanently in their homeland, were taken into account as residents. As we reported previously, the country is quickly becoming one of the leaders on the market of labour migration. In other words, Ukrainian workers move to be employed in other countries and then bring the money they earned back to the homeland.
At the same time, the funds that the labour migrants send to their families at home are not in the calculations for GDP.
According to experts, the amount of remissions by Ukrainian labour migrants exceeds USD 10 billion per year.
For example, the European Bank for Reconstruction and Development estimated that Ukrainian workers produced around 8.5% of Ukraine’s GDP via remissions in 2017.
Exporting labour is becoming one of the vital industries for the country, just like in Philippines.
In addition, the IMF does not look at the purchasing power, which takes the cost of living into account.
For many groups of goods prices in Ukraine are lower than in the neighbouring countries. This means that an ordinary Ukrainian potentially is able to buy more than a citizen of Moldova with their average salaries.
Overcoming the crisis
Even if the IMF calculations are not 100% accurate, the country still has serious economic issues. Experts believe that the situation in Moldova is similar to the one in Ukraine.
“Ukraine is indeed the poorest country in Europe because Moldova also has the factor of the shadow economy, labour migration, and the impact of money by labout migrants on GDP is even higher, so the comparisons are quite correct,” Ukrainian economist Alexei Kusch stated.
“Even taking into account the shadow [economy] sector, we will be poorer than the ‘official Belarus’. This fact has a really simple explanation.
“Ukraine is the only European country stuck in the industrial paradigm of economic development, while the rest of Europe has moved into the post-industrial state. But not only do we not want to correct this erroneous model, but also we are slipping into the pre-industrial phase, increasing the share of agriculture and other resource industries. It’s as if a piece of Asia or Africa landed on a European continent as a meteor. I mean, the Asian, in its worst manifestations, model of the economy, which corresponds to the level of consciousness of the ‘elites’, stuck in the clerical obscurantism of the Middle Ages.”
The expert points out that to overcome the eternal crisis would require a complete revamp of the structure of the economy, developing the service industry instead of the resources sector and agriculture.
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