Peculiarities of non-linear development of Ukrainian economy: causes and tendencies

Abstract

One of the causes of non-linear development of the economies of transitional, post-socialist and developing countries is the rapid increase of public debt and the phenomenon of inflationary economic growth. Transitional and developing economies, under conditions of the lack of their own accessible credit resources, weak domestic financial market and immaturity of the market relations, low competitiveness of national economies, effects of the shadow economy, lack of effective public control over the use of public funds, poor development of civil society institutions and total corruption, are forced to borrow from foreign governments and international lending institutions to meet their requirements. The foreign debt service under the conditions of populist policy and corruption, which is often observed in countries with transitional and developing economies, is becoming an intolerable burden, leading to the effect of a snowball and passing the debt load onto future generations. The risk of economic default arises with a relatively low level of created added value of goods and services, their predominantly internal nature of consumption, tax evasion on the one hand and, high level of inflation, impoverishment of the population on the other hand. In Ukraine, like in many other post-socialist countries of Eastern Europe, a rapid growth of public debt can be observed, resulting in an increase of the probability of default, if respective tranches to cover public expenditure and, above all, social needs of the population do not come in due time. The political crisis and instability, military operations in the conflict zone, worsening predictions about the socio-economic situation against the backdrop of sharp impoverishment of the population resulted, in the rise in prices, first of all for food products and public services, and further development of inflationary processes. The trends in key macroeconomic indicators (GDP, GVA, inflation, unemployment, social spending) and public debt dynamics have been analyzed, their non-linear nature has been revealed, the reactions of these macroeconomic indicators to the external and internal shocks which have a non-stationary nature have been studied. The forecasts of development of the Ukrainian economy have been obtained with an allowance for various scenarios based on the application of econometric models for non-stationary time series and the study of random fluctuations (shocks).