ABSTRACT
Ukraine’s transitional recession was among the deepest and most prolonged of the transition countries. It was characterized by a collapse of economic activity, hyperinflation and currency crises and a lack of coherent macroeconomic and structural policies. In contrast with the stagnation and decline of the formal economy, activity in the informal economy increased considerably. According to a number of studies, Ukraine has one of the largest shares of the unofficial economy among the CIS, Baltics, and CEE countries (only Azerbaijan and Georgia surpass the relative size of the Ukrainian shadow sector). During the last years macroeconomic stability was regained and economic growth and low inflation resumed, whereas fiscal and current account balance was restored. Since 2000 a policy of a fixed exchange rate against the US dollar has been successfully managed. Since 1999, the relative size of the unofficial economy has also started to decline from the high levels since transition was started.
