The factors of financial instability in Ukraine

Abstract

Introduction. The Ukrainian economy functions in conditions of increased financial instability. Its phenomena are global and inherent for the economies of most countries in the world. The greatest losses from financial instability are inherent for Ukraine; which makes it relevant to study the factors that cause financial instability and cause large losses of Ukraine’s GDP.The purpose of the article is to generalize theoretical approaches to determining the factors of financial instability; assess its negative effects on economic dynamics and identify key factors of financial instability in Ukraine.Methods. The methodological basis of the research is the general scientific and economic and statistical methods as analysis; synthesis; induction and deduction; tabular and graphical methods in order to study the factors of financial instability and the amount of economic losses; abstract and logical; and economic and mathematical methods – to determine the impact of financial instability and GDP dynamics; positive and normative methods – to explore the world’s experience in overcoming financial instability.Results. The factors that give rise to instability of the Ukrainian economy and the strong destabilizing influence of exogenous factors on the economic dynamics have been considered. Chronic hryvnia devaluation; cyclical inflation spikes and financial and economic crises are manifestations of increased financial instability. It has been found that significant declines in production occur under the influence of factors caused by the exacerbations in the economies of countries; which are important trading and financial partners of Ukraine and the negative situation in world commodity prices. The dynamics of foreign trade operations contributes to or slows down GDP growth due to the high openness of the Ukrainian economy.It has been justified that the key factor of financial instability in Ukraine is structural and production imperfection. It gives rise to financial dependence of the economy on fluctuations in world commodity prices which is a significant share of GDP and is a major export commodity. It is necessary to change the production specialization towards increasing the output and export of high value-added products in order to ensure sustainable economic growth and financial stability.Discussion. The prospect of further research is to analyze and evaluate the structural defects of the Ukrainian economy; which give rise to its high dependence on the global economic environment and to make recommendations aimed at achieving financial stability and economic growth.