Ukraine is among the world’s thirty largest economies. In the Soviet times, the economy of the republic was the second largest in the Soviet Union, being an important industrial and agricultural component of country’s planned economy. With the collapse of Soviet system, the country progressed toward a market economy, but the move was somewhat longer and more painful than the proponents of shock therapy were to advise.

In 1991, the government liberalized most prices in order to combat widespread product shortages, and was successful in overcoming the problem. In the same time, the government continued to subside the government-owned industries and agriculture by uncovered monetary emission. The loose monetary policies of early 1990s pushed inflation to hyperinflationary levels. For the year 1993 Ukraine holds the world record for inflation in one calendar year. The prices stabilized only after the introduction of new currency, hryvnia in 1996. The country was also slow in the implementation of structural reforms. Following independence, the government erected a legal framework for privatization. However, widespread resistance to reforms within the government and from a significant part of population soon stalled the reform efforts. A large number of governed-owned enterprises were exempt from the privatization process. In the meantime, by 1999, the output had fallen to less than 40% of the 1991 level, but recovered to slightly over the 100% mark by the end of 2006.

Since the late 1990s the government has pledged to reduce the number of government agencies, streamline the regulatory process, create a legal environment to encourage entrepreneurs, and enact a comprehensive tax overhaul. Outside institutions—particularly the IMF—have encouraged Ukraine to quicken the pace and scope of reforms and have threatened to withdraw financial support. But reforms in some politically sensitive areas of structural reform and land privatizations are still lagging.

In early 2000s the economy showed strong export-based growth of 5% to 10%, with industrial production growing more than 10% per year. The growth was largely attributed to a surge in exports of metals and chemicals to China. In 2005, the economic growth temporarily slowed down due to unfavorable changes in terms of trade, as world energy prices went up and metal prices went down. In 2006, the economy is again experiencing above 5% growth. The growth was undergirded by strong domestic demand and growing consumer and investor confidence.

The current Ukrainian economy is a typical example of a post-soviet era developing economy. The World Bank classifies Ukraine as a lower middle-income state. Some significant issues are underdeveloped infrastructure and transportation, corruption and bureaucracy, and a lack of modern-minded professionals - despite the large number of universities. But the rapidly growing Ukrainian economy has a very interesting emerging market with a relatively big population, and large profits associated with the high risks. The Ukrainian stock market grew up 10 times between 2000 and 2006, including the tremendous 341% growth in 2004, followed by 28% growth in 2005, and 24% growth in 2006. Growing sectors of the Ukrainian economy include the IT Outsourcing market, which has been growing at over 100% per annum.

The average nominal salary in Ukraine by the start of 2007 reached over 200 euro per month. For 2006, the Index of Economic Freedom of Ukraine was 3.24, rank 99 amongst 157 states. The country imports most energy supplies, especially oil and natural gas, and to a large extent depends on Russia as an energy supplier. While 25% of the natural gas in Ukraine comes from its own sources, about 35 % comes from Russia and the remaining 30% come from Central Asia through the transit routes that Russia controls.