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You're reading: Economy Ministry: Level of shadow economy in Ukraine grows by 0.4% in the first quarter of 2012

The level of the shadow economy in Ukraine in the first quarter of 2012 grew by 0.4 percentage points year-over-year, but when rounding to a whole number the figure remained unchanged - 34% of gross domestic product (GDP), the Economic Development and Trade Ministry has reported. 

“According to initial estimates, two out of four methods for calculating the level of the shadow economy, which are used by the Economic Development and Trade Ministry, showed an increase in the level of the shadow economy in the first quarter of 2012, another one showed its level remaining unchanged, and only the monetary method showed unshadowing,” the ministry said in a study published on Monday.

The ministry said that the use of only whole numbers in assessing the level of shadowing of the national economy was linked to the fact that this figure is analytically calculated, so it is rough and impossible for verification.

At the same time, according to the schedule presented in the document, after the level of the shadow economy dropped to 33% of GDP in the second quarter of 2011 it grew in the next three quarters, but it was lower than in 2010 and 2009 – 38% of GDP and 40% of GDP respectively.

The ministry said that according to the financial method and the method of a loss-making enterprise, the figure in the first quarter of 2012 rose by 3 percentage points compared to the same period in 2011, to 34% of GDP, while according to the electric method, it grew by one percentage point, to 31% of GDP.

According to the method of “the expenditures of the public – retail trade,” it remained at 44% of GDP, and according to the monetary method, it shrank by 3%, to 26%.

The ministry noted that there remained a number of risks to growth in the shadowing of the economy in future.

“They are associated with the resumption of recession processes in euro zone countries and the preservation of significant financial (debt) problems in foreign markets, which, if they are extended, could cause a sharp slowdown in the pace of economic growth in Ukraine,” reads the document.

According to the ministry, the internal risks of the destabilization of the economic situation also remain high, and among them are an increase in the deficit of the current account of the balance of payments, the growth of devaluation expectations and low credit activity. 

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