April 10, 2018 / 11:29 AM / in 5 months

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

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.

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

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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