Study: Almost a Quarter of Ukraine’s Economy Is in the Shade

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According to a study by Ernst & Young, the total amount of shadow operations in Ukraine in 2018 amounted to 846 billion hryvnias. This is almost a quarter of the country's official GDP. The total amount of shadow operations in Ukraine in 2018 amounted to 846 billion hryvnias, or 23.8% of the country's official GDP. This is evidenced by the preliminary results of a study conducted by Ernst & Young with the support of Mastercard, which were published by the National Bank of Ukraine (NBU) on Monday, February 17. According to the study, a significant part of the shadow economy is generated in cash: 19.7% of Ukraine’s GDP, or 702 billion hryvnias is accounted for by the cash shadow economy. Home production of goods for their own final use that is a non-monetary shadow economy makes up 4.1% of GDP, or 144 billion hryvnias. "Investigative" and "passive" The authors of the study divide the cash shadow economy into "investigative" and "passive", depending on who benefits from the transaction. More than a quarter (26.2%) of the cash shadow economy is the “investigative shadow economy”, where the seller and buyer are the initiators of the cash settlement. The rest (73.8%) is the “passive shadow economy”, initiated by the seller. Stimulating non-cash electronic payments should significantly reduce the level of “passive shadow economy,” the Ukrainian Central Bank said in a statement. According to the NBU, Ernst & Young conducted similar studies in 33 countries, including the Czech Republic, Poland, Slovenia, Slovakia, Croatia, Bulgaria, Bosnia and Herzegovina, Serbia and other countries. Historically, the level of the shadow economy among these countries ranged from 10.1% to 26.9% of GDP.