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Ukraine has large areas of very fertile land, which gave it its reputation as the �bread basket� of the former Soviet Union. Grain, sugar beet and vegetables are the main crops and there is extensive livestock farming. The country is also blessed with mineral resources, particularly coal in the huge Donbass fields, as well as iron ore, manganese and titanium. There are a few reserves of gas and oil but Ukraine has to import over three-quarters of its requirements of these products from elsewhere, mainly from the Russian Federation and Turkmenistan. Much of this is still needed to fuel the heavy industries that dominate the country�s manufacturing economy. Metalworking, engineering products (especially machinery and transport equipment) and chemicals are the most important of these. A large proportion of industry was previously devoted to military production but this has sharply declined since the demise of the Soviet Union and drastic cuts in defence budgets.
With some reluctance, Ukraine began to dismantle its highly centralised command economy in 1992 and introduce market mechanisms under the guidance of the IMF, which the country joined, along with the World Bank, in the same year. Key elements of the programme were privatisation, price reform, trade liberalisation and, as a necessary adjunct, the introduction of a fully convertible currency � the Hryvnya � which came into use in 1995. Throughout this period, and for some years after, the Ukrainian economy contracted at about 12 per cent per year, as well as suffering very high inflation which occasionally touched 400 per cent. The reform programme has continued to make slow progress in the face of opposition from entrenched interests, fear of foreign competition and disagreements amongst the pro-reformers over the pace of change. After a difficult first 10 years, the post-Soviet economy is now fairly stable: annual GDP growth is now 12 per cent (2004), while inflation has been reduced to a more manageable 12.3 per cent (2004). Officially, unemployment is 2.9 per cent of the workforce (2005), but a large �grey� economy has evolved, which some estimates put at half the size of the legitimate economy. Ukraine also belongs to the European Bank for Reconstruction and Development as a �Country of Operation�. Negotiations for Ukraine's membership of the World Trade Organisation are ongoing. Several of Ukraine�s neighbours will be joining the European Union in the near future. Ukraine itself is far from a condition in which it might be accepted for EU membership, but this is bound to have a major impact on the country�s economic policy-making.

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