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 Shock, not disaster, - German experts estimated losses to Ukraine’s economy caused by Donbas blockade

The German advisory group working in Ukraine estimated losses incurred to the Ukrainian economy by the ban to transport goods across the demarcation line in the Donbas at 1.6 percent of the gross domestic product.

As reported by Censor.NET, advisory group head Ricardo Giucci told DW.

"We have estimated that the uncontrolled areas now generate 1.6 percent of Ukraine's GDP," he said as translated from reporting by DW in Ukrainian.

According to him, the steel-producing industry will face the biggest problems, while the impact on power generating industry will be significant as well.

The German economist noted that in general, "from the macroeconomic point of view, this is undoubtedly a shock for the country," otherwise the IMF would not suspend the next disbursement under the Extended Fund Facility program, but "this is not a disaster."

Read more: With Donbas blockade, Kyiv undermines national unity, - DW Ukrainian desk head Johann

He explained that although the production chains in the Donbas were closely linked with the other part of the country in 2013, now the situation has changed as the integration significantly reduced over the three years. It primarily maintained in the production of steel.

"We do not expect strong impact on the other sectors. These two regions have already separated to a significant extent. Anthracite coal and coke can be imported. It will be more expensive over delivery issues, but Ukraine can cope with it without major negative consequences," Giucci said.

Read more: PM Hroisman: Ukraine to purchase coal from US, Australia or South Africa, pay foreign currency for it

The Ukrainian government has not yet accurately assessed the losses caused by severance of economic ties with uncontrolled territories. The National Bank of Ukraine published its revised assessment on Tuesday, March 21. It is projected that the blockade will slow this year's GDP growth by 1.3 percent. The NBU forecasts 1.9 percent growth of the economy in 2017 taking into account the negative consequences of the blockade.

Jan. 25, anti-terrorist operation (ATO) veterans shut down the Luhansk-Popasna haul, launching a trade blockade of the terrorist-held areas in the Donbas.

Feb. 2, participants of the trade blockade barred another railroad track near Bakhmut.

Feb. 16, protesters started to shut down highways.

Feb. 27, separatist websites published a joint statement by the leaders of the so-called "Donetsk and Luhansk People's Republics," demanding Kyiv to lift the blockade by March 1. Otherwise, Alexander Zakharchenko and Igor Plotnitsky promised to seize control of all Ukrainian enterprises and stop deliveries of coal to Ukraine.

March 1, the "DPR" announced the introduction of "external administration" at the Ukrainian enterprises located in the occupied part of the Donetsk region. As a result, a subsidiary of French company Air Liquide halted its work in occupied Yenakiieve.

March 13, a Donbas blockade checkpoint at the Kryvyi Torets railway crossing was dismantled by law enforcers. The information was confirmed by Samopomich MP Semen Semenchenko. A video footage with the seized weapons of blockade participants was released later.

March 15, the National Security and Defense Council of Ukraine imposed a temporary ban on the movement of goods across the demarcation line in the Donbas. Ukrainian President Petro Poroshenko said the only exception was humanitarian aid supplied by Ukrainian and international organizations.

March 16, President of Ukraine Petro Poroshenko signed a decree to enact the previously adopted NSDC decision.

France expressed concerns over the move and urged the Ukrainian authorities to take efforts to lift the blockade.
 
 
 
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