![]() ![]() ![]() Instead, Ukraine should have FDI of 4-5 percent of GDP. ![]() Naturally, the war has scared many away, but that is hardly the main reason why FDI remains flat. Foreigners see what is going on, and real foreign direct investment has been as little as 1 percent of GDP for the last five years. Ukraine has a steady net capital outflow of about 4 percent of GDP each year. What is wrong? Usually the discussion focuses on what the state does, but there’s a better way to understand how the economy really functions: follow the money. A poor country with macroeconomic stability and open access to the large European market should be growing steadily by 7 percent annually. Still, the growth rate has been around 3 percent a year for the last three years, and the IMF predicts a similar rate even for the long term. Probably half of the Ukrainian economy goes unreported in official statistics, and prices in Ukraine are so low that one gets much more for a dollar there then elsewhere. These numbers can be boosted in many ways. According to the International Monetary Fund, Ukraine overtook Moldova as the poorest country in Europe as measured in GDP per capita in 2018 at $2,963, 8 percent less than in Moldova. Ukraine is now the poorest country in Europe. Those who have a lot of wealth transfer it to offshore havens, where the money is safe. On average, Ukrainian MPs keep $700,000 at home. A major reason is that Ukrainians with some extra savings do not put their money into banks but buy additional apartments instead. ApWhat is wrong with the Ukrainian economy?Ĭonstruction is booming in Kyiv, Ukraine, but not the rest of the economy. ![]()
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