KIEV: Ukraine’s economic decline has accelerated as fighting between the army and pro-Russian separatists in the east took a heavy toll on industry and other economic activity in the last three months.
The national statistics office said the economy contracted by 4.7 percent in the second quarter compared with the same period last year and shrank by 2.3 percent in the three months from April, when the separatist rebellion began, to June.
That followed a 1.1 percent fall in gross domestic product in the first three months of the year and reflected the impact of the conflict on industry in two eastern regions that usually contribute almost 16 percent of Ukraine’s GDP.
“The main reason (for the drop) is that we have military activity in which people get killed, are displaced and leave their homes,” said Oleksandr Valchishen of InvestCapital Ukraine.
Ukraine’s economy went into recession in the second half of 2012 and there was no growth in 2013. Kiev initially expected a 3 percent contraction in the whole of 2014 but the conflict has put additional strains on the state budget and deepened Ukraine’s economic turmoil.
Timothy Ash, head emerging markets analyst at Standard Bank in London, said the data “suggested a much sharper hit to economic activity”.
REUTERS
