World Bank sharply downgrades Ukraine's GDP forecast

Ukraine’s economy will contract 12 percent in 2015, according to the World Bank. This is an acute drop from similar estimates in April, when the Ukrainian GDP was predicted to fall 7.5 percent.

Inflation’s going to hit 23.4 percent in 2016, considering a hike in property taxes and expectations from business, said World Bank economist in Ukraine Anastasia Golovach.

The World Bank expects the external debt of Kiev to reach 153 percent of GDP in 2015 and 134.2 percent in 2016.

It’s also expected that the country’s economy will grow one percent in 2016, said World Bank Country Director for Belarus, Moldova, and Ukraine Qimiao Fan in Kiev on Monday.

"On the positive side, the devaluation is helping bolster net exports while further increases in tariffs together with fiscal discipline should create sufficient fiscal space to unlock government investment in the future. This, together with efforts to clean up the banking system and a gradual resumption of lending, is projected to set the stage for gradual economic recovery in 2016, with real GDP growth at one percent," states the report.

In early October, the IMF mission in Ukraine also downgraded its forecast on GDP from nine percent contraction to 11. Kiev expects the economy to decline 8.9%.

Deputy Governor at the National Bank of Ukraine Vladyslav Rashkovan said in September that in 2015 inflation would be 44-46 percent.

Also in September, Standard & Poor’s downgraded Ukraine’s credit rating from ‘CC’ to selective default ‘SD’ level after Kiev began restructuring its multibillion dollar debts and halted payment on a number of liabilities that will be restructured.

Ukraine is obliged to restructure the debt in order to get a $17.5 billion loan from the IMF. However, the deal could collapse, as Russia, one of Ukraine’s biggest creditors, is refusing to accept a haircut on the $3 billion due in December.