World Bank Says Ukraine's Economy To Shrink 9 Pct

KIEV, Ukraine -- Ukraine's faltering economy will plunge into a deep recession and shrink by 9 percent this year, far worse than previously expected, the World Bank said Tuesday.

World Bank headquarters in Washington, DC.

After nearly a decade of robust growth, the economy is being hit hard by the deterioration of the global economy and the national government's failure to implement anti-crisis measures, the Bank said in a statement.

Inflation will hit 16.4 percent this year, better than last year's 22.3 percent but still very high.

In December, the Bank had forecast that Ukraine's economy would shrink by 4 percent and projected inflation at 13.6 percent. The International Monetary Fund expects the economy to contract by at least 6 percent this year.

Those estimates contradict sharply with government expectations of 0.4 percent growth and 9.5 inflation this year, which many analysts dismiss as unrealistic.

Ukraine's economic crisis is one of the worst in Europe. Industrial output slumped by 32 percent in January and February compared with a year ago, and output in the construction industry dropped by 57 percent during that period, according to the World Bank.

The national currency, the hryvna, has lost about 40 percent of its value to the dollar since the crisis hit last fall.

Furthermore, constant political turmoil has worsened the effect of the global crisis on Ukraine by stalling the implementation of key anti-crisis policies.

The IMF withheld the second tranche of an emergency $16.4 billion loan this year after the government failed to trim spending and adopt other stabilization measures.

Source: AP