Shadow economy share dropped to 34 percent of GDP in 2016, - Ministry of Economic Development

In 2016, the level of shadow economy in Ukraine reached 34 percent of the official GDP, which is by 6 percentage points lower than in 2015.

As reported by Censor.NET, this was announced by Economic Development and Trade Ministry in a report.

The ministry says the following factors contributed to unshadowing:

- sustainable macroeconomic stability and growth (real GDP increased by 2.3 percent in 2013, the consumer price index, compared December to December, amounted to 112.4 percent, which resulted from the increase in supply in the domestic market with moderate exchange rate volatility);

- better business climate amid deregulation of entrepreneurial activities, which in turn caused higher investor confidence and boost in direct investment flow;

- gradual legalization of labor market relations due to lower unified social tax, and subsequent weakening of payroll burden.

The ministry experts also say the following unsolved problems hinder the rate of shadow economy shortening:

- significant challenges to the stability of the financial system in the face of continued bankruptcy of banks and their withdrawal from the market;

- tension in international relations with the Russian Federation;

- existence of territories that are not under the control of the government;

- low confidence in government institutions.