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Can We Help Ukraine?

Screen Shot 2015-02-28 at 2.12.19 PMUkraine has been in the news consistently for over a year now due to major conflict between Russia. The economic downturn that has happened because of this conflict is severe. Ukraine is not in good shape while the fate of Russia’s economy is more of a controversy. President Obama described Russia’s as being “in tatters” based on falling oil prices and likely as a result of economic sanctions put on the country by other powers. Others are not so convinced and so our focus moves to the underdog in this situation, Ukraine. More recently the news is talking about the financial crisis in Ukraine and what that means for the rest of the world. Ukraine’s GDP is low and may deplete to as low as $70 billion. The graph 20150228_FNC266above shows Ukraine’s GDP from 1987 to 2011 and in comparison to 2008 at $180 billion we can see that they are not in a good place. 

Additionally, their currency, the hryvnia is losing value fast. In response the IMF has promised a total of $40 billion over a four year time period but has only pledged $17.4 hoping to gain the rest from outside sources.  While this would be great to aid Ukraine’s economy many are concerned about where the IMF pledge will actually be coming from. Currently inflation is as high as 29% and in two years gas prices are predicted to be five times what they were in 2013. Based on these projections the citizens of the country are expected to be a third poorer than when the Soviet Union collapsed; a very dire time indeed. It will be important to keep an eye on Ukraine in the future and to see if the IMF is about to come up with money necessary over the next four years to help the flailing economy.



  1. War is costly, in lives directly lost and in ones indirectly lost through hunger and lack of healthcare. It has been a long, cold winter that’s not yet over. Spring will be too late for many elderly. In any case, as long as the country remains mired in civil war being fought on its own territory, foreign aid can at best be palliative, providing a means to import food and medicine. It won’t help the macroeconomy to stabilize.

    Note that under the USSR the Ukraine was visibly more prosperous — for example Kiev versus Moscow — than was Russia. I was in both in 1977, when I was still able to speak enough Russian to talk to people, and wander the streets and shops.

  2. maguirem15 maguirem15

    This article published by Bloomberg really speaks to the desolate state of the Crimea. Granted it was published back in December, especially with your research it doesn’t seem like the economic conditions have gotten better. I think it is interest that this article notes that the consumer prices in Russia, taking into account the falling ruble, has only increased by 9.1 percent while in Ukraine it has increased by almost 22%. As the war continues forward, it is also decrease tourist and spending in the region, which can help stimulate an economy. Not only are prices increase, incomes are falling, and one of the main sectors of the economy, tourism, can’t help simulate the economy.

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