Economy ministry: Shadow economy in Ukraine drops to 37% of GDP in Q1

"According to the ministry's preliminary estimates, shadow economy in the first quarter of 2017 was estimated at 37% of the official GDP, which was 6 percentage points down against Q1 2016," the report said.

The ministry noted that the de-shadowing stemmed directly from ensuring macroeconomic stabilization and economic growth, wage growth against the backdrop of reducing inflationary pressures and improving retail performance, as well as the improvement of the country's business climate and strengthening investor confidence in Ukraine.

Read alsoUkrainian businesses remain optimistic, trust hryvnia, expect inflation slowdown - NBUAt the same time, the de-shadowing process is being restrained by low public confidence in government institutions, as well as significant challenges to the financial system stability, and the fact that the Ukrainian government has temporarily lost control over certain areas in the east of the country.

In terms of economic activities, a significant pace of de-shadowing was seen in the extractive industry (from 60% in Q1 2016 to 50% in Q1 2017), wholesale and retail trade (from 48% to 43%), processing industry (from 35% to 27%), real estate (from 54% to 47%), finance in insurance (from 57% to 51%), as well as construction (from 42% to 37%).

As UNIAN reported earlier, the shadow economy in Ukraine dropped by 6 percentage points in 2016, to 34% of GDP.