Ukraine’s economy is expected to shrink 9 percent this year
A station on the gas pipeline in the small Ukrainian town of Boyarka.
KYIV, Ukraine — Just when you thought it couldn’t get any worse for Ukraine, it got worse.
Mired in a war out east and slow-going reforms in the capital, now the country's economy is forecast to shrink this year by 9 percent, the International Monetary Fund (IMF) said on Sunday. That's worse than the fund and other analysts previously expected. The IMF also predicts inflation will climb to 46 percent by the end of 2015.
Two weeks ago, Ukrainian officials said the country's GDP had plunged more than 17 percent in the first quarter compared to the same period last year. That’s mostly because of the conflict between Ukrainian forces and pro-Russia separatist rebels.
And there's more bad news on that front as well: the conflict has killed over 6,400 people, the United Nations said Monday.
Russia, less bad
Perhaps adding insult to injury, turns out things are not going nearly as badly as believed for Russia, which is accused by Kyiv, the United States and allies of stoking violence in eastern Ukraine.
Thanks to stabilizing oil prices, the World Bank on Monday revised its outlook for Russia, predicting the economy would contract by 2.7 percent this year, less than the 3.8 percent forecast in April. The bank also expects Russia's GDP will grow 0.7 in 2016.
But that doesn’t mean Moscow — still grappling with Western sanctions — is out of the woods quite yet.
“The acute phase of the crisis is still ahead,” Alexei Kudrin, a former Russian finance minister, said Monday.
Russia's economy shrank by 2.4 percent in the first four months of the year.
Some analysts suggest fears of financial turmoil have even prompted the Kremlin to push forward parliamentary elections next year.
But Russia's new figures don't spell doom. Neither do Ukraine's, as a matter of fact.
During their two-week visit to Kyiv last month, IMF officials said “signs that economic stability is gradually taking hold are steadily emerging.”
“The [Ukrainian] authorities recognize that decisive implementation of economic reforms is indispensable for entrenching financial stability and restoring robust and sustainable growth,” Nikolay Gueorguiev, the fund’s mission chief for Ukraine, said in a statement.