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05 Jun. 2023

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The Road to the EU: Why the Ukrainian economy surprised Europe

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The Road to the EU: Why the Ukrainian economy surprised Europe

The European Commission's annual economic report includes Ukraine for the first time. According to experts, the Ukrainian economy has shown unprecedented results of resilience and development in the face of war. Find out what exactly surprised the EU and how it will help Ukraine to join the European Union faster

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For the first time, the European Commission assessed Ukraine as a future EU member in its internal annual economic reports. In particular, it was about the current economic situation and prospects of the country. Representatives of the EU's highest executive authorities expressed their sincere surprise, as the resilience of the Ukrainian economy and the perseverance of Ukrainians have yielded unprecedented results despite the terrible war and large-scale destruction across the country.


In addition, it was noted that previous expert forecasts that Ukraine's economy would fall by more than 50% did not materialize, and the country showed good exchange rate stability and insignificant inflation of the national currency. 


Let's figure out together what exactly helped the Ukrainian economy to survive and how it will help Ukraine accelerate its accession to the EU.


Private initiative: why the character of Ukrainians helped to keep the country's economy going


The reforms that have been carried out since 2014 have been an important foundation in this regard. They helped to maintain stability at the macro and micro levels, as well as allow reformed state-owned enterprises to take their own initiative and use their resources to scale up projects, support the people of Ukraine and small businesses.


For example, from the very first days of the war, Ukrainian giants such as Ukrzaliznytsia, Ukrposhta, and others began to work actively despite constant shelling and other threats from russia. It is also important that we are talking not only about the immediate resumption of business, but also about the massive launch of volunteer projects that have saved thousands of lives. This, in turn, had a positive impact on the microeconomy, as people started working and paying taxes in safer regions of Ukraine. 


However, there are no illusions about the real state of affairs or embellishments in the European Commission's report. The document clearly states that the diversification of Ukraine's economy is insufficient, and the state has a significant influence on it. After all, the public sector accounts for a tenth of all manufactured goods and is an employer for every fifth person.


Prospects for the Ukrainian economy


According to the European Commission, the Ukrainian economy is expected to grow by 4% by the end of 2024. However, they believe this is possible only if the devastating war is over and the process of rebuilding the country is launched.


Thus, according to recent estimates, Ukraine will need more than $400 billion to rebuild, which is more than twice the pre-war economy. However, it is important to note that this is not enough for full European integration, and Ukraine will have to carry out large-scale economic reform to bring its economic performance closer to that of EU member states.


Judicial reform: why is it necessary?


For almost a year, the Verkhovna Rada of Ukraine has been submitting bills to change the Constitutional Court, but none of them have met EU recommendations. After all, according to EU rules, judges should be elected by professional lawyers, international experts, and members of the public, not civil servants and politicians. However, it has recently become known that the government has registered a new draft law that finally takes into account the recommendations of the European Commission.


And today, the EU authorities are paying special attention to this issue, because after a complete overhaul of the judicial system in Ukraine, they will have to elect thousands of judges and evaluate those already in office.




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Corruption in Ukraine: how the authorities are addressing the problem


According to a report by the European Commission, Ukraine has already fulfilled some of the requirements for suppressing corruption and money laundering. This is evidenced by new appointments to the positions of the Anti-Corruption Prosecutor's Office and the National Anti-Corruption Bureau of Ukraine. In addition, top corrupt officials, including judges and MPs, have received their first suspicions.


However, the next step should be a return to electronic declaration, and according to the latest information, the relevant draft law should be adopted this month.


EU homework: where does Ukraine stand?


The media sector reform has been positively assessed, and experts say that Ukraine has made a real breakthrough in this area. Thus, in December last year, the draft law "On Media" was adopted and signed, and in March this year it received a favorable assessment.


Also, Ukraine is awaiting the Venice Commission's assessment of the adopted Law on National Minorities (Communities), which comes into force on July 1 this year.


By the end of this month, the European Commission should provide final assessments of the state's progress over the year and adjust its recommendations for further actions and reforms. And this fall, the results of the "homework" should be available, on the basis of which a substantive discussion of Ukraine's accession to the European Union will begin.


At the same time, it should be borne in mind that Ukraine has a long and difficult road ahead of it to reform the country at the economic and political levels. And the brutal russian invasion significantly narrows the range of possibilities for the state and forces it not only to implement the recommendations of the European Commission, but also to simultaneously defend Ukraine's sovereignty and independence by deterring the russian army's invasion.


But despite all the obstacles, Ukraine is already being assessed as a future full-fledged EU member and is being praised for its national economy and prospects.


We remind you! The full-scale invasion of russia was the impetus for the development of the military sector in Ukraine. In our previous article, we told you how Ukraine has become a military innovator and how brave soldiers of the Armed Forces of Ukraine are fighting today.


Photo: Depositphotos




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