WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

In Ukraine, booming private consumption and a bumper harvest contributed to an impressive 5% GDP growth in 2011. The budget situation improved markedly, and currency depreciation pressures were successfully counteracted. However, the recent monetary policy tightening coupled with weak external demand will likely dampen the growth prospects this year, possibly to below 4%, while dependence on external funding will remain a source of risk for financial stability. Following the ‘Tymoshenko case’, the association and free trade agreement with the EU have been put on hold and are unlikely to be signed before the end of 2012.