Ukraine economy battered; fighting resumes in East

Kiev-Ukraine (Sept 14)  Ukraine’s economy could shrink by as much as 10% by year-end, the head of the Ukrainian central bank warned on Saturday.

The dour economic outlook came as the Ukrainian military said fighting with pro-Russia rebels had erupted again in the country’s east, despite the continued shaky cease fire.

And a Russian convoy carrying what Moscow said was humanitarian aid entered Ukrainian territory without Kiev’s permission and traveled to the rebel stronghold of Luhansk, where weeks of fighting have left residents without water and electricity.

Russian vehicles began crossing the border late on Friday night and continued into Saturday, according to the Organization for Security and Cooperation in Europe, which said 220 vehicles, including 193 cargo trucks, entered rebel-held territory.

Valeria Gontareva, head of the National Bank of Ukraine, said the embattled country’s annual gross domestic product is contracting this year. “I think it will be minus 9% or even minus 10%,” Gontareva was cited in news reports as saying. Ukraine’s economy grew an estimated 0.4% last year, according to U.S. Central Intelligence Agency’s World Factbook,

Gontareva also was quoted as predicting a 35% drop in exports from Ukraine to Russia for the year. But she ruled out the possibility of debt default, the reports said.

The forecasts came as the central command center for Ukraine’s military campaign against pro-Russia rebels said fighting continued in the east, despite a cease fire agreed early this month.

The command center accused pro-Russia rebels of striking Ukrainian positions at the Donetsk airport and in the town of Debaltsevo with mortar fire Saturday morning. It also said pro-Russia militants were conducting intense shelling of three other towns.

Source: MarketWatch