Ukraine economy loses 2% of 2016 GDP in trade war with Russia

The Ukrainian economy has lost more than USD 1 bln, or 2% of GDP, in 2016 as a result of its trade war with the Russian Federation, Deputy Infrastructure and Euro-Integration Minister Viktor Dovhan told Ukrainian radio in an interview on Jan. 17. “These are direct losses of exporters, who lost markets. These are also losses of transporters,” he said.

As of Jan. 1, 2016, Russia restricted Ukrainian transport to Kazakhstan through its territory, which was expanded to include Kyrgyzia on July 1. However, practically “all of Ukraine’s exports” by rail or car have been blocked on Russian territory, which Ukraine has filed a complaint about to the World Trade Organization.

Zenon Zawada: While it’s politically correct to demand that sanctions against Russia remain intact, the inconvenient truth is that they’re doing great harm to both the Russian and Ukrainian economies. And Ukraine is taking just as painful a hit, if not more so. The sooner sanctions are lifted, in a way that doesn’t compromise Ukraine’s territorial integrity, the sooner Ukraine’s economy can start a serious recovery. Meanwhile, as long as the war remains active in Donbas, few investors will be willing to risk entering the Ukrainian market. The conflict needs to be resolved or frozen for the economy to begin recovering.