KIEV: Ukraine’s war-torn economy shrank by nearly 10 percent in 2015 as its financial sector imploded and consumer demand shriveled up because of the currency’s steep drop against the dollar.
The state statistics service’s final adjusted figure of a 9.9-percent contraction in the gross domestic product was an improvement on the 10.4-percent drop forecast by the government at the end of last year.
But it was worse than the drop of nearly 7 percent recorded in 2014—the year the former Soviet country erupted in chaos that resulted in the downfall of its Russian-backed leadership and the outbreak of an eastern separatist revolt.
The east European nation of slightly over 40 million has now been driven by a 23-month conflict that has claimed the lives of nearly 9,200 people and effectively paralyzed its industrial heartland.
A nearly two-month-long political crisis that saw the prime minister survive a no
confidence vote and Ukraine’s stalled fight against corruption have delayed the disbursement of crucial IMF aid.
Ukraine has further been hurt by a trade war with Russia and a drop in the global price of its wheat and steel exports.
But Ukraine’s central bank still expects the economy to expand by 1.1 percent this year.
Ukraine’s Finance Minister Natalie Jaresko said last week that she was downgrading her government’s initial 2-percent growth projection to 1 percent because of persistent problems in the agricultural and metals manufacturing sectors.
The state statistics service’s breakdown of data showed the largest drops affecting consumer spending and banks.
It said that “financial and insurance activity” had contracted by 27.7 percent while wholesale and retail trade fell by 16.8 percent.
It also reported a 24.4-percent drop in the general services sector.