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Ukraine pins hopes on steel and coal firms ravaged by war

The main hope for Ukraine’s shattered economy lies buried beneath the rubble left by months of fighting in two eastern regions that are home to much of its crippled industrial power.

Only when industrial production pulls out of a dive and achieves growth is the currency likely to stabilize, a step toward restoring confidence in the economy, which is shrinking at its fastest pace since the global financial crisis year of 2009.

The separatist conflict has closed steel plants and coal mines and destroyed infrastructure in Luhansk and Donetsk, regions that together once accounted for a sixth of the national economy and a quarter of industrial output.

Mr Yury, a worker at Zhdanovskaya Ukraine’s fourth largest colliery with coal reserves of 40 million tonnes that halted output in August said that “Our mine is in terrible condition. We’re existing only on hope.”

The regions’ economic clout means that the damage wrought by relentless artillery fire as government forces fight the pro Russian rebels is felt nationwide.

The World Bank said last week that the government would have to shelve hopes of economic growth until 2016, forecasting a contraction of 8% this year and 1% next year because of the disruption to activity in the east.

Alarmed by a crisis that has killed more than 3,500 people and poisoned relations between Kiev and Moscow, investors have dumped Ukrainian assets, pushing bond yields sky high and the hryvna currency to historic lows.

Source – Reuters

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