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Ukraine's shadow economy shrinks amid overall stabilization

Xinhua, November 18, 2016 Adjust font size:

Ukraine's shadow economy fell by 4 percentage points in the first half of 2016 to 38 percent of gross domestic product (GDP) amid the overall stabilization in the country, the Economic Development and Trade Ministry said late Thursday.

The macroeconomic recovery, the improved business climate, the taxation reform and the start of the de-shadowing process on the labor market were the main factors behind the reduced share of the underground economy, the ministry said in a statement.

Among the key imbalances that contribute to the development of economic activities that yield no taxes, the ministry listed the reduction of the corporate sector lending, poor external economic environment as well as trade and transit restrictions imposed by Russia, which used to be Ukraine's leading trading partner for decades.

The financial and insurance sectors along with the mining industry remain the areas with the highest share of the shadow economy, the ministry said. Endi