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Ukraine's Economy 'to Shrink 15%'

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http://news.bbc.co.uk/1/hi/business/8154321.stm

The World Bank has downgraded its economic forecast for Ukraine again, predicting that the country's economy will contract by 15% this year.

In April, the bank had predicted the economy would shrink by 9% in 2009, which was also a downgrade from its original forecast of a 4% contraction.

The economic downturn has hit the price of metals worldwide, and Ukraine relies heavily on this sector for exports.

The World Bank now predicts a gradual recovery starting in 2010.

"The situation has deteriorated the most seriously in the public finances," said the World Bank's head economist for Ukraine, Ruslan Piontkivski.

He added: "The fall in GDP has led to a reduction of income without which expenses are not going to be revised. All this increases the risk of the budget deficit."

The country's budget deficit is expected to be 6.5% of GDP this year, before falling to 4.2% next, he said.

Analysts argue Ukraine is too dependent on a limited number of heavy industries - such as metal production - making it more vulnerable when foreign demand slows.

The economic contraction has also exacerbated diplomatic problems with Russia, since Moscow is worried about how Kiev will be able to find the funds to pay for significant debts owed on energy supplies.

A dispute in January between Russia and Ukraine - a key transit nation for energy - over gas supplies caused tensions in Europe, which is heavily dependent on such fuel.

On Friday, the EU will hold negotiations with Kiev, Moscow and international lenders to try to prevent a repeat crisis.

Do EU banks have big loans in the Ukraine?

A depression level contraction!!!!

At least the Dow and FTSE are increasing in value.

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Quick, quick: join the Euro, that'll sort you out :lol:

It's funny how many Eastern European countries imagine that will be a future cure-all while the entry conditions are crippling them right now.

The old Soviet Union wasn't really designed to be split up and that's the problem. Ukraine's energy always came from somewhere else. The whole gas transit spaghetti junction got left there by accident, a windfall which has only benefited corrupt politicians. Meanwhile, courting NATO has precluded any idea of rescue from Russia, which is currently giving relief to other former Soviet states like Kazakhstan.

In answer to Ripoff's question:

Do EU banks have big loans in the Ukraine?

There are the Austrian banks again, which must have the wobbliest portfolio of all. Their lending includes $44 billion in Romania, $37 billion in Hungary, $22.4 billion in Russia, and $14.3 billion in Ukraine.

German banks are also very exposed. There was a big scheme of microlending, but small amounts of a few million which all add up. German banks set up something called the GUF - German Ukraine Fund - for this.

How Austrian bankers sleep at night I have no idea.

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Actually, not. They are having bikini parties around the fountains of Kiev, in protest against the shut-down of hot water supplies.

Kiev Bikini Party Video

Hmm, what is it about watching a video of shapely young eastern European women washing each other in public fountain that makes me smile so?

It sure beats the hell out of watching the crazy fat Geordie ladettes pulling up their knickers after having a public piss in the street on a night out in NewCastle, that's for sure.

Edited by cashinmattress

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Hmm, what is it about watching a video of shapely young eastern European women washing each other in public fountain that makes me smile so?

It sure beats the hell out of watching the crazy fat Geordie ladettes pulling up their knickers after having a public piss in the street on a night out in NewCastle, that's for sure.

:P

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Hmm, what is it about watching a video of shapely young eastern European women washing each other in public fountain that makes me smile so?

It sure beats the hell out of watching the crazy fat Geordie ladettes pulling up their knickers after having a public piss in the street on a night out in NewCastle, that's for sure.

You have ruined it now :(

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