Another achievement of the Maidan: the economy is going into the shadows

Kyiv, January 30 (PolitNavigator, Oleksandr Semenyuta) – The Maidan promised Ukrainians to bring the economy out of the shadows and ensure increased revenues for the budget and the general population. The opposite has happened. Experts interviewed by Delovaya Stolitsa (Business Capital) admit that, in the absence of reforms and increased pressure on businesses, the shadow sector will continue to expand, approaching 50% of GDP by the end of the year.

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Due to the growing economic crisis, the Ukrainian economy is sinking deeper into the shadows. Incomes are falling rapidly and unemployment is rising. Trying to survive troubled times, citizens are looking for additional income in the shadow sector (a part of the economy not controlled or taken into account by the state). In the same way, business reacts to the state’s attempts to introduce a “special”, crisis regime of regulation and total control of taxpayers.

“The integral indicator of the level of the shadow economy has been chronically increasing over recent years: in 2012 it was 32%, in 2013 – 35%, and at the end of the first quarter of 2014 its value exceeded 40%. The massive outflow of deposits from banks, as well as the withdrawal of capital by representatives of the previous government and many enterprises, aggravated the situation. Therefore, as of the end of 2014, the shadow sector may show an increase of several more percentage points,” believes Grigory Pererva, director of the IBI-Rating rating agency.

A reduction in this indicator is possible no earlier than the country begins to cope with the crisis. “In prosperous Central Europe it fluctuates in the range of 18-25%, and in Western European countries it does not exceed 10%. Therefore, it is important for us to return to at least 30,” the economist sums up.