Ukraine is losing its industries and surviving on resources and agricultural material processing, Strong Ukraine party leader, independent parliament deputy Sergiy Tigipko said.
It also updated its forecasts for Ukraine in 2015: the World Bank expects a 1 percent decline in the country’s GDP instead of a previously projected 2.5 percent increase.
The World Bank also predicts that inflation in Ukraine will speed up to 19 percent in 2014 from previously projected 15 percent, and it will slow down to 10 percent in 2015.
“The conflict in the east is mainly responsible for these lower forecasts, as it has disrupted economic activity, made the collection of taxes difficult, adversely affected exports, and hurt investor confidence. Meanwhile, weak revenue performance, rising spending pressures and a growing Naftogaz deficit make fiscal adjustment more challenging. The current account deficit has adjusted because of the sharp depreciation, but balance of payment pressures remain high due to large external debt refinancing needs, low FDI, and limited access to external financing,” the World Bank said in a press release on Oct. 2.
World Bank experts project that the growth of the Ukrainian economy will resume in the second half of 2015 due to exports.
If the situation in the country’s east doesn’t worsen next year, and large companies gradually resume production, additional competitive advantages that have appeared due to the devaluation of the Ukrainian hryvnia will be conducive to the resumption of exports. Thus, the growth of net exports, according to forecasts, will be a driving force for restoring Ukraine’s GDP in the latter half of 2015, the expert said.
