There is good news: the Canadian Fraser Institute has updated its Economic Freedom Index, according to which Ukraine for the first time left the group of outsiders, economically unfree countries. At the end of 2021, Ukraine took 112th place in the Ranking out of 165 jurisdictions participating in it. The result is 6.17 points out of 10 possible, for comparison: leader Singapore received 8.56. Now Ukraine is in a group that also includes China, India, Brazil and Turkey.
Of course, like any other, the Fraser Institute’s rating is rather conditional. Moreover, in September 2021, the World Bank generally announced that it would no longer publish the Doing Business report on the state and conditions of doing business in different countries. The reason was shortcomings in the methodology. This decision was effectively an acknowledgment that even using large amounts of data provided by a network of partner institutions, it is still difficult to accurately calculate economic freedom scores.
But, in my opinion, what deserves evaluation is not so much the place or points, which can be debated, but the actual symbolism of Ukraine’s exit from the group of economically unfree countries. Despite all the existing skepticism regarding ratings, leading states, international institutions and private companies still rely on them when deciding to invest in the economy of a particular country. At the same time, the very fact of the transition, which was recorded by a foreign institution that is part of a global network of 80 analytical centers, gives grounds to question the catastrophic assessments regarding the state and prospects for the development of our economy. And look at the economic situation and our achievements from a slightly different angle.
It is clear that Russian aggression will make its own adjustments to the rating, but the general conclusion will still remain unchanged – Ukraine, although slowly, is confidently moving in the right direction. Towards greater economic freedom and a smaller public sector. Even in conditions of war.
Even in the harsh conditions of war, Ukraine manages to demonstrate economic growth even in the harsh conditions of war
Photo: UNIAN
We continue privatization, which not everyone likes. But the smaller the state’s presence in economic processes, the freer and more efficient the country’s economy becomes. On the path to full European integration, Ukraine continues to reform its legal system. The emphasis is on guaranteeing the protection of property rights, which is an extremely important factor in attracting foreign investment. Freedom of international trade suffers due to the war, but, again, movement into the EU allows Ukraine to improve these positions.
War also negatively affects the indicator of the reliability of money due to inflation, which is difficult to prevent in conditions of large-scale aggression, constant shelling and mass relocation of production and labor resources. But work is underway in this direction as well. Ukraine manages to avoid hyperinflation, which is an indicator of sound monetary policy.
Despite huge defense spending, the closure of certain data, and currency restrictions, the Ukrainian economy has not only demonstrated a high ability to survive. It shows growth; according to a conservative forecast, we can keep GDP growth at the end of 2023 at 2.8%, and according to an optimistic forecast – up to 5%.
Finally, another key indicator of a free economy is the deregulation of business activities. Getting rid of the influence of the “old oligarchs”, the Ukrainian authorities in their economic policy consciously rely on small and medium-sized businesses. It was thanks to this business segment that Ukraine managed to avoid collapse in the first months of the war. Now the government’s task is to further eliminate restrictions in those areas that do not threaten national security.
So, what do we have in the bottom line? On the one hand, a positive signal to private investors. And this is very important, because post-war reconstruction will be impossible only through international assistance. It is necessary to attract money from private investors. And, on the other hand, there is another set of tasks for the authorities regarding further reforms in the economic sphere. Moreover, the authorities are already working on most of them in preparation for the start of negotiations on accession to the EU. That is, by all indications, we have fairly solid grounds for cautious optimism.
Therefore, we believe in ourselves, help the Ukrainian Armed Forces, bring Victory closer!
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