Ukraine economy to contract by 8% in 2014: World Bank

A woman pays with Ukranian Hryvnia as she shops in the main market in central Simferopol, in Crimea, on March 18, 2014 (AFP Photo/Filippo Monteforte) (AFP/File)

Kiev (AFP) - Ukraine's economy will contract by eight percent this year due to the eastern separatist uprising, the World Bank said on Thursday, downgrading an earlier forecast and forecasting further shrinkage in 2015.

"Disruption in economic activity in the east has resulted in a sharper GDP decline than we expected," said Qimiao Fan, the bank's director for Ukraine, Belarus and Moldova who presented the latest report in Kiev.

"There is no easy way out of the current crisis," Fan added, urging the Ukrainian government to continue with structural reforms to turn the situation around.

Provided these reforms, which include laws combatting corruption and streamlining bureaucracy, are pursued, gross domestic product will grow by three percent in 2016 and four percent in 2017, but after falling by another one percent in 2015, according to the bank.

The World Bank previously predicted this year's contraction at five percent in June, adding that the crisis and the unravelling sanctions against Russia are affecting the entire eastern European region.

Ukraine's economy, already in uninterrupted recession since 2012, has collapsed as Kiev has struggled to end a five-month insurgency by pro-Moscow rebels in its eastern industrial heartland.

Decline in ravaged Donetsk and Lugansk regions, parts of which have declared independence, are the biggest reasons for the decline, Fan said, adding that Crimea's annexation also had an effect.

The International Monetary Fund said last month that the country may need an extra $19 billion in emergency assistance if the conflict, which has killed over 3,200 people since April.