EXCHANGE RATE POLICY AND ECONOMIC GROWTH: LESSONS FROM CENTRAL EUROPEAN COUNTRIES FOR UKRAINE

Abstract

The article examines the relationship between exchange rate dynamics and economic growth in the context of market transformation through a comparative analysis of Ukraine, Poland, the Czech Republic, and Hungary during 1997–2025. The relevance of the study is determined by the ongoing academic debate regarding the role of exchange rate policy in ensuring macroeconomic stability and sustainable economic development, particularly in transition economies. Special attention is paid to the experience of Central European countries that successfully transformed their economic systems, integrated into the European Union, and maintained independent national currencies, thereby preserving autonomy in monetary and exchange rate policy. The study analyzes the dynamics of GDP growth and official exchange rates and identifies common and distinctive features of exchange rate regimes and economic development trajectories in the selected countries. The findings indicate that Poland, the Czech Republic, and Hungary generally achieved stable economic growth despite the adverse effects of the global financial crisis, the COVID-19 pandemic, and recent geopolitical challenges. In contrast, Ukraine experienced significantly higher macroeconomic volatility caused by structural imbalances, political instability, and military conflicts. The research demonstrates that exchange rate fluctuations affected export competitiveness, inflation, investment activity, and overall macroeconomic stability. However, the experience of the Central European countries suggests that exchange rate dynamics should be regarded primarily as a reflection of fundamental economic conditions rather than as an independent source of economic growth. The most successful outcomes were observed in countries that combined flexible exchange rate regimes with inflation targeting, central bank independence, and consistent macroeconomic policies. The article concludes that long-term economic growth depends primarily on institutional quality, monetary credibility, and macroeconomic stability. Based on the experience of Poland and the Czech Republic, the study substantiates the feasibility of further developing a managed floating exchange rate regime, strengthening inflation targeting, reducing dollarization, and gradually integrating Ukraine into the European monetary framework as important directions for post-war economic recovery and sustainable development.