The shadow economy in Ukraine in January-September 2016 totaled 35 percent of GDP, which is 5 percentage points less than a year ago, Ukraine’s Economic Development and Trade Ministry has said in its report published on its official website on Feb. 14.
The ministry said that narrowing of the shadow market is the result of retaining relative macroeconomic stability. In January-September 2016 real GDP grew by 1.3 percent, inflation was 6.4 percent compared to 41.4 percent year-over-year with the hryvnia devaluation by 12.2 percent compared to 39.5 percent a year ago.
The ministry said that the improvement of business climate thanks to deregulation and optimization of the functioning of the public economic sector contributed to it. According to Doing Business 2017, Ukraine was 80th among 190 countries and in revised Doing Business 2016 Ukraine was 81st among 189 countries.
The ministry said that restoration and establishment of new intersector links in the economy and gradual legalization of relations on the labor market due to the reduction of single social security tax are among factors influenced the reduction of the shadow market.
Bringing the economy out of the shadows is hindered by problems which affect the economy development as a whole. These are retaining of the unfavorable economic situation on foreign markets, the introduction of goods and transit restrictions by Russia, retaining of financial risks in the conditions of continuous bankruptcy of banks, non-receiving of funds from the IMF and availability of uncontrolled territories.
As reported, in 2015 the shadow economy in Ukraine fell to 40 percent of GDP from 43 percent of GDP in 2014.
