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You're reading: Anders Aslund: Ukraine ready for economic liftoff soon

Ukraine is at the beginning of its economic recovery. It has gone through a severe economic crisis but undertaken the necessary adjustments. After two years of severe output contraction in 2014–15, the economy saw a hesitant recover of 2.3 percent last year. The standard forecasts suggest growth will continue at 2–3 percent a year. That is unlikely — a higher growth rate seems more probable.

While Ukraine’s recovery remains fragile, the preconditions look pretty good, especially the macroeconomic fundamentals. Two key conditions are the budget deficit and the current account deficit, which Ukraine has reduced to about 3 percent of gross domestic product.

Inflation has fallen to 12 percent and is set to decline further. With $17.6 billion in international currency reserves, Ukraine can cover four months of imports, which is sufficient. The hryvnia exchange rate is highly competitive and has stabilized, being more likely to rise than to fall.

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