April 10, 2018 / 11:29 AM / 10 months ago

Without reforms, Ukraine growth could fall below 2 percent in 2018 - World Bank

FILE PHOTO: A couple visits the vegetable and fruit department of a Metro cash and carry store in Kiev, Ukraine, August 17, 2016. REUTERS/Valentyn Ogirenko/File Photo

KIEV (Reuters) - Ukrainian economic growth could slow to below 2 percent in 2018 and 2019, underperforming expectations, if the government does not take steps to modernise its economy and eliminate corruption, the World Bank said on Tuesday.

The World Bank has kept its forecast for GDP growth this year unchanged at 3.5 percent, but says a failure to implement reforms as promised to international financial institutions could slow growth by dampening investor confidence.

“Reforms in land markets, the financial sector, anti-corruption, and privatization would not only address medium-term growth bottlenecks, but also provide an important immediate signal to strengthen investor confidence,” it said in a statement.

If “reforms do not progress and the International Monetary Fund reviews are not completed, growth could fall below 2 percent in 2018 and 2019,” it said.

Slow reform progress has held up funding under a $17.5 billion loan programme from the IMF and also from the World Bank, and there is a shrinking window to implement policy changes before parliamentary and presidential elections in 2019.

“Continued weak economic growth of 2 percent or less going into the elections could undermine political and social stability, which would result in a further decline in investor confidence and growth,” the World Bank said.

Stubbornly high consumer price growth is a continuing risk to the economy and the bank has amended its inflation forecast for end-2018 to up to 10 percent from 7 percent, World Bank economist Anastasia Golovach said at a briefing.

Reporting by Natalia Zinets; Writing by Alessandra Prentice; Editing by Matthias Williams/Keith Weir

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