The Ukrainian economy looks to be plunging deeper into a recession. According to the report published by Gosstat, within the first quarter of this year the country’s GDP has fallen by 6.5%, and in comparison to January-March last year for 17.6% annually. The worst result was the period between October to December in 2014 with a drop even further to 14.8%.
In an attempt to explain the main reasons to explain the contracting economy, experts are looking at the reduction of industrial production and trade. Industrial production has fallen in the first quarter by 21.4%, and trade by 24% annually. GDP has fallen not so strongly thanks to agriculture which in quarter 1 has showed recession only at the level of 4.7%. However, the main factor for landowners will become results of future crop which will affect the economy later. It should be noted that Cabinet of Ministers still has had three possible scenarios, and now economists consider as the most probable the third (the most pessimistic, which assumes the further drop of 11.9% due to inflation of 42.8%.
However even in the light of the latest events the Ministry of Finance actively reports about an overfulfillment of plans of a number of tax invoices, occasionally amounting to 25%. Thus despite a reported drop in sales, due to an increase in prices also the revenue of taxpayers increases. Besides the authorities again have began to compensate the VAT very badly, thereby cutting down on operating costs.