The World Bank has cut its forecast for Ukraine's economic growth next year to 2.5 percent from 5.0 percent, it said on Thursday citing falling demand for the former Soviet republic's exports and financial market instability. The bank said it had also cut the 2012 inflation forecast to 9.4 percent from 10.0 percent.
"Ukraine is entering a period of falling external demand, limited access to financing and instability on the global markets," World Bank economist Ruslan Piontkivsky told reporters. This year, Ukraine's economy, dominated by steel exports, is set to grow by 4.5 percent.
Piontkivsky said the outlook was based on Ukraine continuing to pay a relatively high price for Russian gas and restarting co-operation with the International Monetary Fund which stopped lending to Kiev at the start of this year. The IMF has long urged Ukraine to eliminate subsidies that keep household gas and heating prices below the market level and account for a significant portion of budget deficit.
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