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OECD Territorial Reviews: Ukraine 2013

image of OECD Territorial Reviews: Ukraine 2013

 This review addresses the territorial dimension of a range of policy challenges in the Ukraine, including Urkraine's productivity challenge, large inter-regional disparities, and need for decentralisation.

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Assessment and recommendations

Overall, Ukraine’s regions have struggled to regain growth momentum since the global crisis erupted in 2008-09. After contracting through the 1990s, the economy returned to growth just before the turn of the century, and all regions enjoyed a period of positive – and in some cases very strong – growth through 2007. In 2008, the economy more or less stagnated as the world economy slowed, and it experienced a sharp contraction in 2009. The downturn was fairly broad-based – all regions contracted – but it was severest in the country’s main economic centres: roughly half of the output loss recorded in 2009 took place in four regions, accounting for 37% of pre-crisis GDP. This outcome reflected to a great extent the collapse of world trade, which hit major exporting regions disproportionately. This, in turn, underlies to a significant extent the shakiness of the subsequent recovery: export demand has remained muted, and domestic demand growth is constrained by slow credit growth and a lack of room for fiscal stimulus. Ukraine as a whole, as well as its constituent regions, must therefore find a growth model that is less exposed to volatile external markets and yet is not based on an unsustainable growth in domestic credit or government spending.

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