Ukraine is rich in natural resources. It has a major ferrous metal industry, producing cast iron, steel, and steel pipe, and its chemical industry produces coke, mineral fertilizers, and sulfuric acid. Manufactured goods include airplanes, turbines, metallurgical equipment, diesel locomotives, and tractors. It also is a major producer of grain, sunflower seeds, and sugar and has a broad industrial base, including much of the former USSR's space and rocket industry. Although oil and natural gas reserves are small, it has important energy sources, such as coal, and large mineral deposits, and is one of the world's leading energy transit countries, providing transportation of Russian and Caspian oil and gas across its territory.

Ukraine encourages foreign trade and investment. The foreign investment law allows Westerners to purchase businesses and property, to repatriate revenue and profits, and to receive compensation in the event that property were to be nationalized by a future government. However, complex laws and regulations, poor corporate governance, weak enforcement of contract law by courts and corruption have discouraged broad foreign direct investment in Ukraine. While there is a functioning stock market, the lack of protection for minority shareholder rights severely restricts portfolio investment activities. Total foreign direct investment in Ukraine was approximately $16.375 billion as of January 1, 2006. At $349 per capita, this was one of the lowest figures in the region.

While countries of the former Soviet Union remain important trading partners, especially Russia and Turkmenistan for energy imports, Ukraineís trade is becoming more diversified. Europe is now the destination of over one third of Ukraine's exports, while around one quarter of Ukraine's exports go to Russia and the CIS. Exports of machinery and machine tools are on the rise relative to steel, which constitutes over 30% of exports. Ukraine imports over 80% of its oil and 73% of its natural gas. Russia ranks as Ukraine's principal supplier of oil and Russian firms now own and/or operate the majority of Ukraine's refining capacity. Natural gas imports come from Russia and Turkmenistan, which deliver the gas through a pipeline system owned and controlled by Gazprom, Russia's state-owned gas monopoly. In 2005 and 2006, Ukraine switched from barter to cash payments for gas imports. Ukraine controls the gas pipelines on its territory that are also used to transit Russian gas to Western Europe. The complex relationship between supplier, transporter, and consumer has led to some tensions, including Russia's decision to cut off gas supplies for three days in January 2006.

The Government of Ukraine's 12-month $605 million precautionary standby agreement with the International Monetary Fund (IMF) expired in March 2005. In Article IV Consultations, the IMF recommends fiscal discipline and structural reforms, particularly of Ukraine's pension system. In July 2005, the World Bank approved a $250 million Development Policy Loan (formerly a Programmatic Adjustment Loan) to support reforms to improve the investment climate, public administration and financial management, and social inclusion. European Bank for Reconstruction and Development (EBRD) project outlays totaled 248 million Euros in 2004, bringing its portfolio to almost 2 billion Euros.

In 1992, Ukraine became a member of the International Monetary Fund and the World Bank. It is a member of the EBRD but not a member of the World Trade Organization (WTO). Ukraine applied for membership in the WTO in 1995. Progress on its application has been slow but picked up momentum in 2004 and 2005. The government has made accession to the WTO a priority.

Ukraine has significant environmental problems, especially those resulting from the Chornobyl nuclear power plant disaster in 1986 and from industrial pollution. In accordance with its agreement with the G7 and European Commission in 1995, Ukraine permanently closed the Chornobyl Nuclear Power Plant in December of 2000. Urgent measures for radiation and workers safety as well as structural improvements to the "sarcophagus" erected by the Soviet Union are largely complete, and the contract for construction of the new shelter to be built around the sarcophagus is expected to be awarded mid-2006.

Ukraine also has established a Ministry of Environment and has introduced a pollution fee system, which levies taxes on air and water emissions and solid waste disposal. The resulting revenues are channeled to environmental protection activities, but enforcement of this pollution fee system is lax. Ukraine ratified the Kyoto Protocol in April 2004.

Construction of a shipping canal through a UN protected core biosphere reserve in the Danube Delta, which began in May 2004, is an environmental issue of international interest.