Central and Eastern Europe Enterprise Servers: Technology Markets 2006-2010

GDP growth in Ukraine fell significantly from 12.1% in 2004 to only 3.0% in 2005. The European Bank for Reconstruction and Development believes the slowdown can be attributed to problems in the global steel market (the metallurgic industry is the major export-oriented industry in Ukraine) and political instability in the country. In the winter of 2005, the Ukrainian government agreed to pay nearly double for Russian gas as it had previously paid, in response to Russia's push for a more than four-fold price hike.

The inflation rate jumped from 9.0% in 2004 to 14.0% in 2005 due to increases in the price of gas, utilities, and some food products. The State Statistics Committee believes that the government limited inflation to 10.3% last year, however. Unemployment declined 0.3 percentage points in 2005 but is expected to rise in 2006 due to an economic slowdown in the country.

FDI inflow was lower in 2005 than it had been in the previous year, largely due to a re-privatization program announced in the spring. The investment climate became more positive after the new Cabinet assumed office in September and the large steelworks Kryvorizhstal was sold to a foreign investor at a transparent auction.