57. What are the main branches of Ukrainian industry?

Industry is the most important area of Ukraine’s economy. Its main branches are heavy industry, especially the steel, machine-building and coal industries. A considerable part is played by the food and light industries. About two-fifth of Ukraine’s people work in industry, and about a fifth work in agriculture. Most other Ukrainians have jobs in such service industries as education and health care.

Many of Ukraine’s heavy industries are concentrated in the Donbas region, the centre of Ukraine’s heavy industry.

The machine-building is presently the largest branch of industry. It accounts for a third of the national industrial output and employs about a fourth of Ukraine’s workers. Automobiles and buses, locomotives and railway cars, airplanes and ships, tractors and harvesters, machine tools and metallurgical equipment are produced at Ukraine’s plants and factories.

58. Why is steel industry the most important sector of the national economy?

Metal production, in particular iron and steel industry, is the dominant heavy industry in Ukraine. Ukraine is the world's eighth largest producer and third largest exporter of iron and steel.

Ukrainian iron and steel industry accounts for around 2% of worldwide crude steel output, near 5% of the national gross domestic product and near 35% of Ukrainian export revenue. In 2007 it employed 420,000 people – 10% of industrial labour and 2% of the total workforce. It has the highest, by a wide margin, revealed comparative advantage of all branches of the Ukrainian economy.

Ukraine possesses substantial natural reserves of iron ore. Ore mining exceeds the demands of domestic steel mills, but export potential is weakened by high extraction costs.

Among the 80 top steelmakers in the world, 5 are Ukrainian. Almost 75 % of steel production in Ukraine is exported from these companies: KryvorizhStal, Mariupol, AzovStal, ZaporizhStal, Alchevsk.

59. What does Ukraine import?

The country imports most energy supplies, especially oil and natural gas, and to a large extent depends on Russia as its energy supplier. While 20 percent of the natural gas in Ukraine comes from internal sources, about 60 percent comes from Russia and the remaining 20 percent from Central Asia through transit routes that Russia controls. At the same time, 85 percent of the Russian gas is delivered to Western Europe through Ukraine.

Leading suppliers of Ukrainian imports included Russia (30% of total imports), Germany (10%), Poland, China and Turkmanistan.

Also Ukraine imports agricultural machinery, new and used passenger cars, unmanufactured tobacco, meat and poultry, metallurgical grade coal, materials handling equipment and other industrial machines.

The main tendency in Ukrainian imports is importing finished goods.

60. Why is Ukraine dependent on energy imports?

Both Ukraine’s energy production system and its economy as a whole are sorely outdated. Fifty-four percent of Ukraine’s pipelines – built for a normal exploitation period of 25 years – are twenty-one years old or older, and their state of disrepair increases the possibility of accidents. Moreover, pipeline gas pumping units are in particularly bad condition, which means increasing amounts of gas are needed to pump gas through the pipelines.

Ukraine’s outdated energy system has also contributed to the fall in gas and oil production since 1990. Despite the recent discovery of several gas fields, official Ukrainian sources estimate that oil and gas condensate reserves will be exhausted between 2025 and 2030, and natural gas reserves by 2032.

In addition, Ukraine exhibits very low levels of energy efficiency. As a result, despite having a population of only 48 million, Ukraine is the seventh largest gas consumer in the world, with a yearly consumption of 75-78 billion cubic meters per year.