Topic 1.

The subject, methodology and tasks of studying the

economy of Ukraine

1.Essence and components of the national economy.

2.National economy in the system of economic knowledge and its connection with other
sciences.
3.The condition, sources and tasks of studying the economy of Ukraine.

The main economic categories and terms:

National economy Macroeconomic analysis Macromodels

Endogenous and exogenous Components of the national National economy

parameters economy functions
 The list of recommended sources

1. Hryniv L. S., Kichurchak M. V. Natsionalna ekonomika Ukrainy: navch. posibnyk. Lviv:

LNU im. Ivana Franka, 2020. S. 9–25.
2. Ekonomika Ukrainy: natsionalna stratehiia rozvytku / [L. S. Hryniv, O. V. Stefanyshyn,
M. V. Kichurchak ta in.]; za red. prof., d.e.n. L. S. Hryniv. Lviv: Vydavnychyi tsentr
LNU im. Ivana Franka, 2009. S. 6–15, 17–41.
3. Natsionalna ekonomika: navch. posib. / [A. F. Melnyk, A. Yu. Vasina, T. L. Zheliuk, T.
M. Popovych]; za red. A. F. Melnyk. K.: Znannia, 2011. S. 13–33.
4. Natsionalna ekonomika: navch.-metod. posibnyk / [O. Ye. Kuzmin, U. I. Kohut, I. S.
Protsyk, H. L. Verbytska]; za zah. red. O. Ye. Kuzmina. Lviv: Vydavnytstvo
Natsionalnoho universytetu “Lvivska politekhnika”, 2010. S. 7–11.
 Economy Explained (Based on October 2023 Inflation Report)

The NBU’s updated forecast is based on an assumption that

starting in 2025, security risks will be significantly reduced
thanks to the Armed Forces of Ukraine This will allow
Ukrainian Black Sea ports to fully resume operations. It is
also expected that significant amounts of international
financial assistance will continue to be provided to
Ukraine.

How is the economy holding up?

Ukraine’s real GDP stands to grow by about 5% this year even as the war grinds on. This is a
bigger increase than the NBU expected previously. The main reason for this growth is the high
adaptability of businesses and households to operating in wartime. Companies have demonstrated
the ability to quickly set up production and logistics even amid the war’s challenging conditions.
This talent is best exemplified by the energy sector, which has been generating an almost
uninterrupted supply of power for the country.

Agricultural companies and farmers have made a significant contribution to economic growth.
Source: Thanks to favorable weather, they have harvested more crops than last year. At the same time, the yields
https://bank.gov.ua/
en/news/all/prosto- of certain crops have reached their highest levels in Ukraine’s history. However, exports of newly
pro-ekonomiku-na- harvested crops have been complicated by the suspension of the grain corridor. Agricultural companies
osnovi-materialiv-
inflyatsiynogo- and farmers are nonetheless increasing supplies via alternative routes, including Danube River ports.
zvitu-za-jovten-
2023-roku
 Economy Explained (Based on October 2023 Inflation Report)

How is the economy holding up?

The economic recovery is also being supported by a

stable domestic environment: a moderate pace of
inflation, a sustainable FX market, and a smoothly
running banking system ready to operate even during
power outages. It is important for businesses to be able
to launch new projects, hire employees, recover, and
grow.

The NBU expects that the economy will keep

growing. Despite the assumption that the war will
drag on into 2024, Ukraine’s real GDP will rise by
3.6%. The high adaptability of businesses will
continue to contribute to growth. The economy will
also be underpinned by high expenditures on defense,
Source:
https://bank.gov.ua/ social programs, and projects to restore damaged
en/news/all/prosto-
pro-ekonomiku-na-
infrastructure.
osnovi-materialiv-
inflyatsiynogo-
zvitu-za-jovten-
2023-roku
 Economy Explained (Based on October 2023 Inflation Report)

What about prices?

Inflation has plunged compared to 2022. Although consumer prices grew by more than
26% last year, the NBU is forecasting that this year’s increase will be less than 6%. The
NBU’s measures to safeguard the sustainability of the FX market and increase confidence in
hryvnia savings have played an important role in curbing inflation.

The NBU expects inflation to remain subdued going forward. Next year, however, it will be slightly
higher than this year. Businesses’ transportation and energy costs will remain high for as long as russia
continues its military aggression against Ukraine. In addition, many companies are planning to raise
wages, which will also be priced into goods and services.

Source:
https://bank.gov.ua/
en/news/all/prosto-
pro-ekonomiku-na-
osnovi-materialiv-
inflyatsiynogo-
zvitu-za-jovten-
2023-roku
 Economy Explained (Based on October 2023 Inflation Report)

What will happen to jobs and wages?

The labor market is recovering slowly but consistently. The NBU estimates that
unemployment is gradually shrinking. This is supported by household surveys, among
other things.

However, the labor market situation remains challenging. War-related structural

mismatches in the labor market are one of the main reasons. As a consequence, employers
often have trouble finding the right person to fill a vacancy. Companies in construction and
manufacturing have been hit hardest by the worker shortage, business outlook surveys
show.

At the same time, the deficit of personnel is giving businesses another incentive to
raise wages. Many companies are increasing both nominal and real wages. A salary bump
is real if it outpaces the rate of inflation.

Source:
https://bank.gov.ua/
en/news/all/prosto-
pro-ekonomiku-na-
osnovi-materialiv-
inflyatsiynogo-
zvitu-za-jovten-
2023-roku
 Economy Explained (Based on October 2023 Inflation Report)

How are deposit and loan rates changing?

Interest rates on deposits and loans have declined in response to the decrease in
inflation and the NBU’s key policy rate.

The gradual decline in loan rates will help the economy recover further.
Meanwhile, although hryvnia deposit rates have edged lower, they will continue to
protect savings from being eroded away by inflation. Specifically, banks are offering an
average rate of about 14% on deposits with maturities of at least three months (yielding
11% after taxes). These rates are higher than both the current rate of inflation and the
NBU-projected one for 2024.

Investments in government bonds (domestic government debt securities), available to

people through banking apps, remain attractive. In particular, interest rates on domestic
government debt securities with maturities of up to one year stand at 16%–17%. By the
way, income from investments in these securities is tax-free.
Source:
https://bank.gov.ua/
en/news/all/prosto-
pro-ekonomiku-na-
osnovi-materialiv-
inflyatsiynogo-
zvitu-za-jovten-
2023-roku
The subject of national economy (as the training course)
is the system of rules and regularities by which are
managed to processes and relations in the complex
environmental, social and economic system of a state.
 It is considered such scientific approaches to
understanding the essence of a national economy:

according to the first approach

A national economy is – totality of households,
firms and different state institutions that interact with
each other within the certain natural environment
which is bordered by frontiers.

according to the second approach

A national economy is an organizational and

economic integrated system of interrelated spheres
and branches of people activities which have had
corresponding proportion and interconnecting
location within the territory that is bordered by
frontiers.

The common thing is that the functioning of the national economy takes place in the
natural environment (resource - land), which has boundaries - state borders.
Taking into account the first approach we could identify such basic components of the
national economy:

 households;

 firms;

 state institutions;

 the environment which is bordered by frontiers ;

Taking into account the second approach we can specify such key elements of the
national economy:

 spheres and branches of people activities;

 a structure of spheres and branches of people activities (here it’s

about proportionality and interconnecting location );

 the area (territory) which is bordered by frontiers .

Formation of the national economy implies taking into consideration such major

preconditions:

 intensification of the division of labour in the society

 existence of a State.

 commonality of mental development for members of a society

 Mykola Ziber – the well-known Ukrainian
economist:

A national economy isn’t a simple mechanical totality of individual (private)

economies, but it is the totality of the economies that are heavily depending
from each other and generate new social and economic quality which is caused
such interactions.
The major characteristics of the national economy:

- national sovereignty.

- resource and production characteristics .

- economic and organizational characteristics.

- transaction deals.
 The national economy is focused on the realization of such main functions as:

Theoretical and enlightening

(epistemological).
Educational and attitudinal.

Practical (applied).

Forecast.
 Methodology is the system of scientific
knowledge about ways, methods and instruments
for studying
Such methods belong to general something.
scientific methods of the national economy
research:
Method of scientific abstraction and theoretic modeling.

Logic methods.

Structural and functional method.

Methods of synergetics

Methods of induction and deduction.

Methods of evolution, dialectics and historic chronology.

Methods of mathematical modeling.

 Table 1
The Classification of National Economy Macromodels
The classification criteria of
Number The type of models
national economy models
Logical;
Due to the way of object Tabular;
1.
representing Graphic ;
Economic and mathematical.
Due to the length of the research Short-term;
2.
period Long -term.
Closed (not taking into account foreign economic relations);
Due to the level of economic system Opened (taking into account foreign economic relations);
3.
openness Ecologically sustainable (taking into consideration requirements
of ecological security).
Due to fullness of economic Simple;
4.
subject’s coverage Complex.
Due to the character of the time Static;
5.
factor representing Dynamic.
Equilibrium;
Due to criteria of analysis to Disequilibrium;
6.
achieving outcome Structural (equilibrium is as a result of income reallocation);
Balanced.
Explanatory;
7. Due to the main aim of research Management;
Outlook and strategic.
Sourse: Hryniv L. S., Kichurchak M. V. Natsionalna ekonomika: navch. posibnyk. Lviv: “Mahnoliia 2006”, 2008. S. 14.
 Natural sciences
Physics
Mathematics
Economic sciences
Chemistry
Economics
Economic history and National Biology and others
history of economic though
Finance
economy Humanities
Accounting and taxation Political sciences

Industrial economics Philosophy

Regional economics and Sociology

others Cultural studies
Law sciences and
others
 A state of studying the economy of Ukraine.
When Ukraine was a part of the former USSR, our
economy had been studied as a constituent of its single
economic complex. It means that Ukraine hadn’t had their
own national economy.

After declaration of Ukrainian independence it had made possible to fundamental learning

the economy of Ukraine as the national one.

The national economy is a subject of scientific interests for such institutions

as:

scientific institutions of the National Academy of Science – Institute for

Economic and Forecasting, Institute of Regional Research named after M.I.Dolishiy,
Institute of Industrial economics and etc.

higher educational institutions of Ukraine;

national and regional public authorities;

International organizations which carry out international comparisons.

Sources of the national economy studying are:

scientific monographs and handbooks;

articles in scientific journals of Ukraine and other

countries;

statistical data and various rankings and etc.

The tasks of the national economy development in
Ukraine taking into account current strategic
principles are:

to form preconditions for the EU membership;

to provide economic growth and sustainable development;

to implement an innovative development model;

to update state economic policy.

 When we study the national economy, it will be worth taking into
consideration that:
political and economical sovereignty of a State is the foundation of its functioning and
development;

it always focuses on providing economic interests of people and requirements of national
security;

it is socially oriented;

the national economy structuring has to be adequacy to its resources, possibilities and
needs;
 When we study the national economy, it will be worth taking into
consideration that:
it is a complex, dynamic, environmental, social and economic system which has
synergetic interrelations and effects;

it has to guarantee economic security to people;

its competitiveness is provided with economic growth, preservation of national wealth and
state protectionism;

it has to be efficient in the economic, social and ecological context.