Ukraine dropped back in the Inclusive Growth and Development Index for 2018, which was published by the World Economic Forum on Jan. 22.
In comparison to last year’s 47th place, Ukraine lost two positions, and now ranks 49th among 77 emerging economies presented in the ranking, which covers 103 economies around the world.
This is the second year the WEF has presented the index.
In contrast to the traditional measure of economic growth – a country’s gross domestic product – the WEF’s Inclusive Growth and Development Index is designed to capture other economic indicators, such as poverty levels, life expectancy, public debt, median income, wealth inequality and even damage to health and the environment caused by pollution.
Ukraine gained only 3.42 points out of a possible maximum high of seven in the index.
According to calculations based on economic figures as of 2016 and five-year trends from 2012 to 2016, inclusive economic development in Ukraine has decreased by 6.8 percent over the past five years.
That party reflects the continuing decrease in the population: over the past five years, Ukraine’s population has decreased from 45.2 million to 42 million people.
While access to quality education, basic services, and infrastructure in Ukraine is still quite high, the country’s score in financial assets protection, as well as corruption levels and political ethics is very low, according to Ukraine’s Inclusive Growth and Development Index Profile for 2017 – the latest one available.
Since 2014, Ukraine’s economy has been through a major crisis provoked by Russia’s annexation of Crimea and fomenting of a war in the Donbas. This has led to the loss of approximately 15 percent of Ukraine’s economic potential, according to figures on the Reanimation Package of Reforms think tank’s website.
The ongoing trade war with Russia has also had big negative impact on Ukraine, as from 2015 Russia started blocking exports of Ukrainian goods to Central Asia, and Ukraine stopped buying Russian gas and many other Russian products.
That has been offset slightly by the signing of Ukraine’s Association Agreement with the European Union, which came into force in full in September, and which led to 2 percent economic growth in 2017, according to Ukraine’s State Statistics Service. Meanwhile the IMF bailout program, which has already provided $8.6 billion out of a promised $17.5 billion in loans since 2015, has helped Ukraine stabilize its exchange rate and boost budget revenues.
Nevertheless, the Ukrainian government’s continued foot-dragging in anti-corruption reforms, and still over-regulated and bureaucratic economy has kept its score in the inclusive development index down.
The Inclusive Growth and Development Index 2018 ranking is headed by Norway, which the WEF reckons has had the most inclusive economy in the world for the second year in a row.
Russia, despite being under Western economic and political sanctions after the Kremlin occupied Crimea and started a war in the Donbas in 2014, is ranked 19th in the index, and deemed a “stable economy.”
The WEF says its Inclusive Growth and Development Index reflects more closely the criteria by which people actually evaluate their countries’ economic progress.
According to the WEF, most citizens evaluate their respective countries’ economic progress not by GDP growth statistics but by changes in their households’ standard of living — a multidimensional phenomenon that encompasses income, employment opportunities, economic security, and quality of life.
The Inclusive Growth and Development Index measures the economic progress of 103 countries of the world, based on several economic indicators in addition to GDP.
The indicators include access to and quality of education, workers’ skill levels, access to basic services and infrastructure, corruption levels and rent rates, investment in the real economy, productivity, and wage levels.
