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World Bank lowers outlook for Ukraine economy

World Bank lowers outlook for Ukraine economy

KIEV: The World Bank has lowered its outlook for Ukraine’s economy as the crisis in the country’s eastern region enters its second year.In a report published on Wednesday, the international lender said it expects the Ukrainian economy to shrink 7.5 percent this year, compared to the 2.3 percent it projected back in January.

The new forecast is grimmer than figures released by the government in Kiev and the International Monetary Fund (IMF), predicting a 5.5-percent decline in Ukraine’s gross domestic product (GDP) in 2015.Ukraine’s economic output had already suffered a 6.8-percent contraction in 2014.

“The conflict in the east has become the main driving force behind the fall,” the World Bank report said, adding, “Ukraine has considerable potential, but its implementation is possible only if the situation in the east is stabilized and the banking system recovers.”

Ukraine’s pro-West government has come under pressure from the European Union to enact economic reforms in a bid to tackle inflation, debts and corruption.

Last month, the IMF signed off on a loan program for Ukraine worth USD 17.5 billion, as part of a package of assistance aimed at pulling the former Soviet Union state back from the verge of default.

Qimiao Fan, the World Bank’s director for Ukraine, warned on Wednesday that the “top concern of investors is that they do not feel secure when they invest in this country because of corruption.”

One year into the Ukraine conflict, the eastern regions are still reeling. Donetsk and Lugansk, the two mainly Russian-speaking regions, have witnessed deadly clashes between pro-Moscow forces and the Ukrainian army since Kiev launched military operations in April 2014 to crush pro-Russians there.

More than 6,000 people have died in the conflict, the UN says. Some 1.5 million people have been also forced to flee their homes over the past months of the turmoil