Ukraine’s Economy on Its Knees: GDP Fell 10 Percent in 2015!

Ukraine has a population of just over 40 million and has been shaken by conflicts for 23 months, resulting in nearly 9,200 lives lost and an industry that is almost paralyzed.

The Ukrainian economy shrank by nearly 10 percent in 2015, pressured by the collapse of the financial sector and reduced personal consumption influenced by a sharp decline in the hryvnia’s exchange rate against the dollar.

Final data from the state statistical office showed on Monday that Ukraine’s gross domestic product (GDP) decreased by 9.9 percent last year. The government had forecast a 10.4 percent decline in activity at the end of last year.

In 2014, the economy shrank by nearly seven percent. It was that year that chaos erupted in Ukraine, resulting in the departure of the pro-Russian leadership and a rebellion by separatists in the east of the country.

Ukraine has a population of just over 40 million and has been shaken by conflicts for 23 months, resulting in nearly 9,200 lives lost and an industry that is almost paralyzed.

A two-month political crisis and a stalemate in the fight against corruption delayed the disbursement of aid from the International Monetary Fund (IMF). Additional pressure is created by the trade war with Russia and the decline in wheat and steel prices in global markets.

Despite this, the Ukrainian central bank still expects economic growth of 1.1 percent this year.

Finance Minister Natalia Yaresko stated last week that her government has halved its initial growth projection to one percent due to problems in the agricultural and metallurgical sectors.

Data from the statistical office for 2015 show that the largest decline was recorded in personal consumption and in the financial sector. Thus, “financial and insurance activities” decreased by 27.7 percent last year, while wholesale and retail trade fell by 16.8 percent.

Activity in the service sector fell by 24.4 percent.

However, it increased in the healthcare sector by 2.3 percent. This is also the only sector where activity growth was recorded, notes the AFP agency.

From the beginning of 2014 until the end of last year, the Ukrainian currency hryvnia lost about two-thirds of its value against the dollar.