Thursday, March 5, 2015

Cracks in Ukrainian economy surface beyond Kiev's cloak of calm - Nation World - - Barstow, CA

By Bloomberg News
Posted Mar. 3, 2015 at 6:00 AM

KIEV, Ukraine — Ukrainians are seeing signs the economy is cracking under the weight of war and the risk of default.

While restaurants and cafes are bustling and shelves are full in Kiev, a city of 3 million, a recession stretching into a second year is igniting angst about the return of the disarray unleashed by the Soviet Union's collapse in 1991. Especially outside the capital, that era of food shortages, hyperinflation and mass unemployment doesn't seem so far away.

"My business is about to close and there are many more like it," said Valentyna Lozova, a 65-year-old accountant in Kiev. "Salaries aren't rising, inflation is galloping and the hryvnia's in freefall. I'm afraid of the future."

It's becoming harder for Ukrainians, mindful of the thousands who've died in an 11-month insurgency near the nation's border with Russia, to put a brave face on their economic woes. With much of the country's industrial base in ruins and a looming debt restructuring, the effect may be felt for years. The economy is set to plunge 12 percent in 2014-15 and the inflation rate jumped to 28.5 percent in January, the world's second-highest behind Venezuela.

As the economy deteriorated, the hryvnia has sunk 62 percent in the past year, the most in the world, while benchmark government debt due 2017 trades at 43 cents on the dollar, data compiled by Bloomberg showed. The currency collapse has sparked panic in some towns.

"I see people every day in supermarkets buying sacks of flour and cereals as prices grow," said Iryna Lebiga, a 31- year-old mother of three who's struggling to find a buyer for her unprofitable sheep farm in Poltava, a 350-kilometer (220- mile) drive east of Kiev. "People don't have money. Someone approached us last year but my husband thought he offered too little. Now, nobody offers even half of that."

Complete story at - Cracks in Ukrainian economy surface beyond Kiev's cloak of calm - Nation World - - Barstow, CA

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