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Disproportions of Ukraine's gross available income and their impact on GDP dynamics

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  • I. Kryuchkova

Abstract

The article shows that, during the period since 2013, in Ukraine, negative structural changes have taken place in the distribution of gross available income leading to a constant shortage of resources in the sectors of general state management and non-financial corporations, and, correspondently, to increasing debt pyramids. The sector of non-financial corporations continues to lose a lion's share of their potential incomes from property due to excessive credit interests, which leads to weakening of the main investors and makes it investment incapable even for simple reproduction making it intensively increase its external debts, which recently have been four-fold greater, in average quarter terms, than the sector's savings. As a result, both the investment processes and GDP dynamics are slowed down. The continued accumulation of the government's liabilities on social transfers has created a constant resource shortage in the state sector and turned the market of domestic borrowing into a government's domain. The above mentioned developments, in turn, hampers the lowering of credit rates, and supports the mechanism of pumping out the companies' net property incomes from the real sector to that of financial mediators and further to repay the banks' debts. Continued growth of the households' incomes and expenses with the rates higher than those of GDP, without sufficient investments to renew the production only leads gradual loss, by the domestic producers, of this country's domestic market. Deep and protracted underinvestment of structural changes and economic modernization appears to depend on the economically unjustified policy of raising social standards.

Suggested Citation

  • I. Kryuchkova, 2013. "Disproportions of Ukraine's gross available income and their impact on GDP dynamics," Economy and Forecasting, Valeriy Heyets, issue 3, pages 121-137.
  • Handle: RePEc:eip:journl:y:2013:i:3:p:121-37
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    File URL: http://eip.org.ua/docs/EP_13_3_21_uk.pdf
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