Ukraine economy shrinks 15% as Russia holds east

Ukraine’s economy shrank 15.1% year-on-year in the first quarter of this year, according to preliminary figures from the national statistics institute. This is the first official reflection of the economic damage caused by the Russian invasion at the end of February. GDP grew by 6.1% in the fourth quarter of last year.

Russia now occupies 20% of Ukrainian territory and fierce battles continue in the eastern provinces of the country, while grain exports are blocked.

The World Bank has estimated that Ukraine’s economic output could fall by 45% this year.

Photo: AFP

The National Bank of Ukraine bought 70 billion hryvnia ($2.4 billion) in government bonds to help fund the budget, the most since Russia invaded in February. This brings its public debt portfolio to 190 billion hryvnia.

The central bank said it needed to increase purchases due to “large fiscal needs and lower revenues amid tax cuts, insignificant amounts of market borrowing and a slowdown.” international aid flows.

The bank reiterated its call on the government to raise the coupon on its domestic debt to attract investors and ease pressure on the hryvnia and inflation. Yesterday, Ukraine’s Finance Ministry’s latest war bond sale raised the smallest amount yet.

The executive arm of the EU is expected to recommend next week that Ukraine be granted candidate status. The recommendation still needs to be debated and adopted by the European Commissioners.

A final opinion from the European Commission, even if positive, would require the approval of member states before Ukraine officially receives the status.

Bloc leaders are expected to discuss the issue in Brussels on June 23-24 and several countries have said they are against the move, saying Ukraine cannot be given preference over existing candidates.

The accession process includes an arduous set of steps and conditions that could last more than a decade.

At least 200 start-ups focused on deep tech projects could apply for up to €60,000 through the European Innovation Council (EIC), the European Commission has announced. The EIC will also provide counseling and matchmaking services.

Ukraine had a ‘vibrant’ start-up scene with more than 1,600 start-ups before Russia invaded the country, says the EU commissioner for innovation, research, culture, technology. Education and Youth, Mariya Gabriel, in a statement.

“This new action aims to safeguard this progress, strengthen links with the European innovation ecosystem and ensure that Ukrainian start-ups are well placed to become a key driver in the reconstruction of the Ukrainian economy”, Gabriel said.

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Christi C. Elwood