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30 Jul, 2014 16:00

​Ukraine’s economy contracts 4 times faster in Q2 losing 4.7%

​Ukraine’s economy contracts 4 times faster in Q2 losing 4.7%

Ukraine’s GDP in the second quarter of 2014 has declined 4.7 percent compared to the same period in 2013, the Ukrainian State Statistics Service said on Wednesday. The contraction was more than four times the 1.1 percent fall in the first quarter.

The gross domestic product of Ukraine has been falling every quarter since the beginning of 2012. Ukraine expects GDP to tumble by 6-6.5 percent this year according to Finance Minister Alexander Shlapak, who added the inflation rate will reach 19 percent in 2014.

Prices have risen 11.6 percent in the last six months as the Ukrainian hryvnia has fallen against the US dollar.

The International Monetary Fund has postponed granting the next tranche of money to support the Ukrainian economy awaiting the adoption of a bill to cut social expenditure. The vote will take place on Thursday in the Rada.

The first attempt to approve budget cuts failed when Ukrainian deputies voted against; afraid they might lose the trust of the electorate.

As the IMF head Christine Lagarde said on Tuesday, the reform program in Ukraine in exchange for funding is being implemented by Kiev, though with delays.

The decision to grant $1.5 billion to Ukraine will be considered by IMF in August, thus the vote by Rada deputies on Thursday will be important. The decision to hold early elections will be on the agenda, and IMF is very concerned who will operate the reforms in the country afterwards.

Earlier Lagarde said the IMF has no interest in increasing the amount of financial help to Ukraine if the economic situation in the country worsens with an increasing civil war.

In April the IMF said it may provide Ukraine with $17 billion in exchange for a cut in social spending. It was then the Ukrainian authorities almost doubled the price of gas and reduced state support to enterprises.

READ MORE: IMF gives green light for $17bn Ukraine aid package

In exchange for these steps the IMF granted Kiev the first tranche of support of $3.19 billion in May.