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

In Ukraine, a less buoyant domestic demand will likely result in a slowdown of economic growth to around 3% in 2012, with risks on the downside. Both fiscal and monetary policies have been relaxed recently, but may not generate sufficient demand in the environment of elevated uncertainties. While currency depreciation pressures have been so far largely counteracted, the high dependence on external funding will continue to remain a source of risk for the financial stability. The country’s increased political isolation implies that the association and “deep” free trade agreements with the EU will not be signed at least until the October 2012 parliamentary elections.