The January gas dispute with Russia contributed to the largest monthly production decline in the last ten years. Industrial production fell by 34 percent compared to January last year, and by 16 percent compared to December 2008.
Production decreased in all sectors except for oil refining. In the chemical, petrochemical industry, and machinery manufacturing, it decreased by as much as 50 percent. The Ukrainian industry was pushed into such a crisis by the decline in global demand, the price of its main export product – steel, and a credit drought that destabilized the banking system. Tens of thousands of employees were sent on unpaid leave. Seven banks fell under forced administration, including the fifth and seventh largest in the country. The economic crisis that came from the global financial market is further exacerbated by political conflicts within the ruling structure. The government is unable to implement measures to alleviate the crisis, and the $16.4 billion loan from the International Monetary Fund is also in question. Its second tranche is in jeopardy due to the planned budget deficit, which has also caused a drop in Ukraine’s already low credit rating. On Tuesday, parliament also accepted the resignation of Finance Minister Pinzenik, a strong advocate of economic reforms, who resigned due to a conflict with Prime Minister Yulia Tymoshenko over the deficit and high budget spending. (Davorka Zmijarević)
