An overview of the effects of monetary policy in the Ukraine on GDP and inflation, from 1993 to the present day.

% annual growth rate:

  M3 Nominal GDP
1993-2020 112.35% 157.11%
1993-2000 333.85% 505.86%
2001-2010 35.33% 20.64%
2011-2020 12.16% 14.39%

Sources: M3 from World Bank database and nominal GDP from IMF database, as at March 2022.

The medium-term relationship between money and nominal GDP growth in Ukraine, 1993-2020

Five-year moving averages of annual % changes, with 1995 being the start of the first five-year period

Comment on monetary trends in Ukraine

In 1991, Ukraine declared independence from the collapsing Soviet Union and introduced a series of coupons called Karbovanets which replaced the Ruble at par. The Kyiv branch of the former Soviet central bank became the new Ukrainian central bank and was renamed the National Bank of Ukraine (Національний банк України). Like Russia, Ukraine suffered from hyperinflation in this period and in 1996, Karbovanets were replaced by the Hyryvnia, which has been the country's currency ever since, apart from in the Crimea where the Russians replaced it with the Ruble after annexing the peninsula in 2014.

After the hyperinflation episode, the Central Bank pledged to stabilise the new currency in relation to the US Dollar with which it was pegged until 2014, but the country has suffered a number of inflationary spikes, notably in 2000, 2008 and especially 2015, where inflation peaked at over 60% following the decision to float the currency and abandon the dollar peg. In between the first two of these spikes, the country enjoyed steady growth and the economy began to diversify after being largely dominated by agricultural exports. The 2014 revolution resulted in an economic decline due to a drastic reduction of trade with Russia.

The Ukrainian central bank has a mandate to achieve price stability via inflation targeting. The current inflation target is 5%, although since the 2015 inflationary episode, inflation has been much higher than this except for the early months of 2020 when emergency restrictions were introduced in response to the coronavirus pandemic and consumer activity fell sharply in consequence.