Ukraine’s economy highly tied to East situation

If in Kiev NATO Secretary-General Jens Stoltenberg made clear that Ukraine won’t receive western heavy weapons anytime soon, a letter made public by IMF Managing Director Christine Lagarde brought a bit of optimism to the conflict-torn country. After summing up “the ambitious economic program” the Ukrainian authorities have embarked on “with support from the international community” – that has exceeded $10 billion so far in 2015 out of a 4-year $17.5 billion assistance package – Lagarde wrote that despite a “very challenging environment, (Ukraine’s) economy is showing signs of recovery.”

Days before the World Bank (WB) provided new $500 million loan to strengthen Ukraine’s financial sector, the WB underlined that the assessment of the country’s recovery and peacebuilding needs – worth $1.52 billion – was a “living document” as long as the conflict in the east is ongoing. Ukraine’s GDP decreased 16.3% in the first semester of 2015, according to Ukrainian official sources, but the second semester may show some progress after the WB forecasted the decrease would stabilize at 12% for the whole year while inflation would peak at 50.8%.

Whatever the signs, Ukraine’s economic environment remains inherently tied to what’s happening in the east. According to analysts, only a “real post-conflict situation would bring some reliable perspectives for Ukraine’s economy.”