You're reading: ​World Bank: Ukraine may show economic growth in 2016, Russia will remain in recession

A new World Bank report published on Jan. 7 predicts the Ukrainian economy will grow by 1 percent in 2016, this is after a 12 percent reduction in 2015. It also forecasts an economic growth of 2 percent for 2017.

According to the Global and Economic Prospects report: “Growth in Ukraine may start rebounding, helped by easing tensions and the IMF supported stabilization program.”

Read at KyivPost.com: “10 reasons why I’m optimistic about Ukraine’s economy in 2016” by Anders Aslund

Ukraine’s economy plummeted in 2015 as the ongoing conflict in the eastern part of the country, a sharp reduction in output and negative regional spillovers from Russia compounded its already fragile state, reads the report.

Any improvements it said would be harmed by “an escalation or failure to resolve the conflict in eastern Ukraine” which “might also lead to sustained or sharpened sanctions on Russia, with additional negative spillovers.”

The bank sees a continued recession for Russia in 2016 with a further reduction of 0.7 percent, after the economy fell by 3.8 percent last year.

The Russian economy is much larger than Ukraine’s but the fall in oil prices, sanctions and counter sanctions have had significant negative repercussions.

According to Timothy Ash, an analyst for Nomura International, the Ukrainian dollar GDP has halved since 2013, from $178 billion to $85 billion in 2015. But the situation for Russia has been worse, as it went from $2.1 trillion in 2013 to $1.3 trillion in 2015.

Overall, the World Bank has lowered its global growth forecasts to 2.9 percent for 2016. In June of 2015, the organization had predicted the world economy would grow by 3.3 percent in 2016. Its predictions are still a slight improvement on 2015, which saw growth of 2.4 percent.

The greatest risk to global growth identified by the bank was a slowdown in the Chinese economy.

Kyiv Post staff writer Isobel Koshiw can be reached at [email protected].