KIEV: The World Bank sharply cut its outlook for war-torn Ukraine on Wednesday, forecasting its economy will shrink by a massive 7.5 percent this year.
The move saw the UN development lender lowering its 2015 economic outlook from previously estimated contraction of 2.3 percent.
The new forecast is even grimmer than estimates by the Ukrainian government and International Monetary Fund (IMF) of 5.5-percent decline in GDP, and further darkens the outlook for Kiev as it fights pro-Russian separatists.
The forecast also heralded continued shrinkage of Ukraine’s economic output, which had already fallen by 6.8 percent in 2014.
After two years of recession, Ukraine has been brought close to economic and financial collapse by the past year of conflict in its industrial east.
Its government is fighting pro-Russian separatists who have taken control of parts of two key eastern regions.
“The conflict in the east has become the main driving force behind the fall,” the World Bank said in its report, presented in Kiev on Wednesday.
“Ukraine has considerable potential, but its implementation is possible only if the situation in the east is stabilized and the banking system recovers.”
The IMF has agreed to a bailout deal worth $17.5 billion (15.9 billion euros) over four years. It estimates the country must raise $40 billion overall to avoid financial collapse.
Ukraine’s government pleaded at a conference with international financiers and officials on Tuesday for more investment to boost the economy.