The size of shadow economy was down to 31% last year from 35% in 2016, the EconMin has estimated, citing preliminary data. Judging by electricity consumption, shadow economy was down 3pps to 28%; based on monetary statistics, it was down also 3pps to 24%; judging by household spending and retail sales, it was down 4pps to 47%; and judging by corporate losses, Ukraine’s shadow economy was down 2pps to 20% last year, said the EconMin. Shadow economy peaked in Ukraine in 2014 at 42%-43%, according to the EconMin’s estimates. That’s when economic crisis erupted, and Moscow annexed Crimea and invaded the industrial region of Donbass. Since then, the shadow sector has been shrinking.
The EconMin attributed the continuing decline in the size of shadow economy to macroeconomic stabilisation, an improved business climate, lower investment risks, and better expectations of businesses. On the downside, trust in government institutions remains low, risks to financial stability remain, and vast areas in the east and south remain outside of the government control because of Moscow’s aggression.