Ukraine’s Third-Quarter GDP Shrank 1.3% as Protests Sour Outlook

Ukraine’s economy shrank less than initially estimated in the third quarter as officials warn that nationwide protests calling for President Viktor Yanukovych’s resignation risk worsening the slump.

Gross domestic product fell 1.3 percent, compared with an Oct. 30 estimate for a 1.5 percent contraction, the state statistics committee, based in the capital, Kiev, said today in an e-mailed statement. Output fell 0.3 percent from the previous quarter after contracting 0.5 percent between March and June.

The data confirm a third recession since 2008 as Ukraine struggles to cope with a drop in the price of steel, a key export, and trade restrictions imposed by Russia. With reserves at a seven-year low, First Deputy Prime Minister Serhiy Arbuzov says $10 billion is needed to ward off a default. Prolonged protests, sparked after Yanukovych snubbed a European trade pact, could “seriously hit” Ukraine, Arbuzov has said.

“This just underlines the scale of the challenges facing the Yanukovych administration,” said Tim Ash, London-based chief economist for emerging markets at Standard Bank Group, said in e-mailed comments. “I assume that ongoing street demonstrations have further disrupted economic activity over the past few weeks, and likely the economy dipped even further into recession in the final quarter of the year.”

Yields on Ukrainian dollar debt due 2014 rose 1.74 percentage point 21.22 percent, the highest on record, as of 12:38 p.m. in Kiev, according to data compiled by Bloomberg. The hryvnia fell to 8.2500 per dollar from 8.1710 yesterday.

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