Analysis of External Imbalances in the Economy of Ukraine on the Basis of Determining an Acceptable Level of the Current Account of Balance of Payments

Shapovalenko Nadiia V. () and Tokarchuk Taras V. ()
Additional contact information
Shapovalenko Nadiia V.: University of Banking of the National Bank of Ukraine
Tokarchuk Taras V.: National Bank of Ukraine

The Problems of Economy, 2016, issue 4, 57_66

Abstract: The aim of the article is to determine the size of an acceptable level of the current balance and external imbalance for Ukraine with regard to the steady trade deficit having been observed for the last ten years. The assessment is based on several most common methods, namely: analysis of macro indicators, indicators of external sustainability, and the volume of foreign direct investment received. According to the calculations performed by all three methods, during the 2005-2016 the average acceptable level of the current account deficit made up about 2.5% of GDP, which is lower than in countries of Eastern Europe, however, is at the same level with Asian countries. The largest negative gap of the current account was observed right before the crises of 2008 and 2012-2013 when the gap exceeded 3.5% of GDP. Furthermore, it is important that the processes of correcting external imbalances were aligned with achieving the internal balance. The analysis based on a Swan diagram shows that in most cases the Ukrainian economy needs to correct either internal or external imbalances, which made it impossible to use the same instruments to remove them. Under these conditions the determining role of the state economic policy should be aimed at both searching for optimal variants of macroeconomic measures of the monetary and fiscal nature, and implementing the necessary structural reforms.

Keywords: acceptable level of the current balance; external imbalances; internal balance; monetary policy (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.problecon.com/export_pdf/problems-of-economy-2016-4_0-pages-57_66.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idp:redpoe:y:2016:i:4:p:57_66

Access Statistics for this article

The Problems of Economy is currently edited by Kizim Nikolay A.

More articles in The Problems of Economy from RESEARCH CENTRE FOR INDUSTRIAL DEVELOPMENT PROBLEMS of NAS (KHARKIV, UKRAINE)
Bibliographic data for series maintained by Alexey Rystenko ().