The shadow economy in Ukraine in 2015 decreased to 40 percent of GDP from 43 percent of GDP in 2014, the Economic Development and Trade Ministry of Ukraine has reported in its study published on its official website on July 4.
“The upward trend for the shadow economy started in 2013 and continued in the conditions of price and devaluation shocks and escalation of hostilities has been broken,” the ministry said.
The ministry said that in Q1 2015 the indicator grew to 46 percent of GDP, while in Q2 2016 it decreased to 42 percent of GDP and in H2 2016 it stabilized at 40 of GDP.
The shadow economy level in 2015 is higher than indicators for 2011-2013 being 34-35 percent of GDP.
The ministry said that tax burden on the corporate sector along with the high cost of borrowed funds, the unfavorable foreign economic situation on the key commodity markets, reduction of domestic demand, growth of expenses on imported raw materials due to hryvnia devaluation and the introduction of additional imports duty, large investment risks, worsening of international relations with Russia and the loss of its markets and the annexation of Crimea and war in eastern Ukraine hinders the reduction of the indicator.
The ministry delivered the pace of the shadow economy using four methods for the period of 2012-2013-2014-2015.
As for the “public expenses-retail goods turnover” method it was 46 percent – 51 percent – 58 percent – 56 percent. As for the loss of companies – 27 percent – 27 percent – 35 percent – 26 percent; power – 29 percent – 30 percent – 38 percent – 36 percent; and monetary 24 percent – 24 percent – 33 percent – 30 percent.
