2016 Index of Economic Freedom

Ukraine

overall score46.8
world rank162
Rule of Law

Property Rights25.0

Freedom From Corruption26.0

Limited Government

Government Spending30.6

Fiscal Freedom78.6

Regulatory Efficiency

Business Freedom56.8

Labor Freedom47.9

Monetary Freedom66.9

Open Markets

Trade Freedom85.8

Investment Freedom20.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 42.8 million
  • GDP (PPP):
    • $370.8 billion
    • -6.8% growth
    • -0.2% 5-year compound annual growth
    • $8,668 per capita
  • Unemployment:
    • 7.7%
  • Inflation (CPI):
    • 12.1%
  • FDI Inflow:
    • $410.0 million
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For the seventh year in a row, Ukraine has registered Europe’s lowest levels of economic freedom. Respect for the rule of law has not been established, and the lack of investment freedom has hurt productivity, including in the important agricultural sector. Ukraine was once recognized as the breadbasket of Europe, but the agricultural sector’s lack of modernization has made that a distant memory.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 46.8 (down 0.1 point)
  • Economic Freedom Status: Repressed
  • Global Ranking: 162nd
  • Regional Ranking: 44th in Europe
  • Notable Successes: Trade Freedom and Fiscal Freedom
  • Concerns: Investment Freedom, Financial Freedom, and Rule of Law
  • Overall Score Change Since 2012: +0.7

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Background

Ukraine gained independence after the Soviet Union collapsed in 1991. Pro-Euro–Atlantic members of parliament ousted President Victor Yanukovych in February 2014, and Petro Poroshenko was elected to replace him in May. Parliamentary elections in October led to a pro-European government under Prime Minister Arseniy Yatesenyuk of the center-right People’s Front. Russia has illegally annexed the Autonomous Republic of Crimea, and pro-Russian separatists are trying to destabilize the eastern part of the country. Ukraine has received $30 billion in aid from the IMF, the World Bank, the EU, and other bilateral donors. Its Association Agreement with the EU includes Deep and Comprehensive Free Trade Area (DCFTA) accords. Dependence on steel exports and natural gas imports makes the economy vulnerable to global financial turmoil and Russian pressure.

Rule of LawView Methodology

Property Rights 25.0 Create a Graph using this measurement

Freedom From Corruption 26.0 Create a Graph using this measurement

Ukraine has made some progress in fighting corruption, but considerable problems persist. The removal of Victor Yanukovych ended the extensive graft by the president, his family, and his closest associates. However, the old oligarchies continue to benefit financially from their close association with top politicians. Even in areas controlled by the national government, the judiciary remains weak, and contracts may not be well enforced.

Limited GovernmentView Methodology

Ukraine’s top individual income tax rate is 20 percent, and the top corporate tax rate is 18 percent. Other taxes include a value-added tax and a property tax. The overall tax burden equals 37.6 percent of total domestic income. Government spending amounts to 48.1 percent of GDP. The budget deficit has averaged about 5 percent of GDP over the past three years. Public debt exceeds 70 percent of GDP.

Regulatory EfficiencyView Methodology

Political instability continues to compound regulatory uncertainty in commercial transactions. The labor code is outmoded and lacks flexibility. The government influences prices through state-owned enterprises. The IMF reports that 740 state-owned enterprises registered losses amounting to about 1 percent of GDP in 2014 and that, as a group, SOEs have accumulated substantial liabilities amounting to more than 12 percent of GDP.

Open MarketsView Methodology

Ukraine’s average tariff rate is 2.1 percent. Government procurement procedures favor local companies. Foreign investors may not purchase agricultural land, and the investment framework remains underdeveloped with other sectoral restrictions. The Russia–Ukraine conflict continues to interfere with trade and investment flows. The large number of non-performing loans continues to be a drag on the banking system.

Country's Score Over Time

Bar Graph of Ukraine Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Ukraine to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Switzerland810.5
2Ireland77.30.7
3Estonia77.20.4
4United Kingdom76.40.6
5Denmark75.3-1.0
6Lithuania75.20.5
7The Netherlands74.60.9
8Germany74.40.6
9Luxembourg73.90.7
10Iceland73.31.3
11Czech Republic73.20.7
12Georgia72.6-0.4
13Finland72.6-0.8
14Sweden72-0.7
15Austria71.70.5
16Norway70.8-1.0
17Latvia70.40.7
18Poland69.30.7
19Cyprus68.70.8
20Spain68.50.9
21Belgium68.4-0.4
22Macedonia67.50.4
23Armenia67-0.1
24Malta66.70.2
25Slovakia66.6-0.6
26Hungary 66-0.8
27Albania65.90.2
28Bulgaria65.9-0.9
29Romania65.6-1.0
30Portugal65.1-0.2
31Montenegro64.90.2
32France62.3-0.2
33Serbia 62.12.1
34Turkey62.1-1.1
35Kosovo61.4N/A
36Italy61.2-0.5
37Slovenia60.60.3
38Croatia59.1-2.4
39Bosnia and Herzegovina58.6-0.4
40Moldova57.4-0.1
41Greece53.2-0.8
42Russia50.6-1.5
43Belarus48.8-1.0
44Ukraine46.8-0.1
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