The situation of the Ukrainian economy during the coronavirus pandemic

Abstract

Since its independence, in the last three decades the Ukrainian economy has been hampered by numerous social and economic challenges, which were originated either from within or outside the country. After the economic slump and stagnation of the first decade of the independent Ukraine, the first years after the millennium were defined by and economic upturn until the global economic crisis at the end of the decade. After the recession of 2009, Ukraine was back on the path of growth, but in 2014 faced another challenge, which was – due to its nature – perhaps even more serious than previous ones: Ukraine’s territorial integrity was (and is) threatened due to the events unfolded in the southern and eastern parts of the country. The annexation of Crimea and Sevastopol, which is not recognized by the international law, as well as the hostilities and separatist efforts in eastern Ukraine caused such a serious economic downturn in the mid-2010s, which set back the country's economic performance by roughly a decade. After that, Ukraine had just started its slow but stable economic recovery, but at the beginning of 2020, it had to face a new challenge of global origin again. Although the coronavirus pandemic has felt its impacts worldwide, Ukraine – as we have seen so far – was in a completely different situation compared to neighboring countries. Therefore the primary objective of this study is to examine the extent of the downturn caused by the coronavirus pandemic in the Ukrainian economy compared to domestic and international expectations, and whether, thanks to government measures and international support programs discussed here, it was able to return to a path of economic growth. Although the domestic measures and the loans and grants provided by international institutions helped curb the recession of 2020 and recover the economy, the results of this study highlighted that the pace of the recovery lagged behind the neighboring countries’ upturn. Its main reason is that the Ukrainian economy – due to the events unfolded in 2014 – was in a more vulnerable state and under more difficult conditions at the beginning of the pandemic, so the economic recovery was also able to start only at a disadvantage in the regional context.