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

UKRAINE
The severe political crisis and the suspension of Russian credits have put the currency under strong downward pressure, prompting the National Bank to switch to a floating exchange rate regime and impose partial capital controls. The near-term economic prospects are hardly encouraging, with a balance-of-payments crisis and a bank run looming on the horizon. A ‘rescue package’ from the IMF is urgently needed to prevent this scenario. However, the ‘austerity’ conditionalities, which will likely be attached to such a package, will almost certainly push the economy into recession this year.