FINANCIAL IMBALANCES IN UKRAINE: CHANGES AND VULNERABILITIES AFTER CRISIS OF 2014
During 201415, the economy of Ukraine was sharply affected by the political conflict between Russia and Ukraine. Economic imbalances, high political uncertainty during and after the Euromaidan, economic sanctions and, furthermore, drop in international prices on metal in 2014 are not the sole factors, which caused deep economic crisis in Ukraine. Ukrainian authorities faced with huge accumulated fiscal and external disproportions, the authorities embarked on a main macroeconomic regulation in early 2014. Severe currency devaluation combined with fiscal consolidation, triggered substantial deterioration in investment and consumption. The contractionary impact of adjustment was complicated by an increasing conflict in the second half of the year, which led to sharp economic disruption in investor and consumer confidence and the industrialized east. In Current paper, we aimed at revealing vulnerabilities of the economy of Ukraine, in particular, from the point of view of real, external, public and monetary sectors. Our analysis has distinguished the most considerable weaknesses of economy of Ukraine: high degree of tension with Russia and interregional tensions threatening the integrity of the country, history of political instability and government inefficiency, weak constitutional framework, poor economic diversification, excessive private sector borrowing, poor economic policy track record, continued high exchange rate risk, low FX reserves.
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