German advisors to Cabinet: Ukraine may lose 0.1% of GDP without FTA with Russia

German advisors to Cabinet: Ukraine may lose 0.1% of GDP without FTA with Russia

The exchange of trade restrictions and the abolition of a free trade  area (FTA) with Russia will cause a rise in the foreign trade deficit by $119 million for Ukraine.

This is stated in a research note by the group of German advisers to the Ukrainian government, the text of which is available to Ukrinform.

"New restrictions, according to our calculations, will lead to a decline in Ukrainian exports to Russia by $624 million and a decrease in Russian imports by $505 million a year. Thus, the annual trade  deficit of Ukraine will grow by $119 million, or 0.1% of GDP," reads the report.

Russian trade restrictions will also affect many sectors of the Ukrainian economy, according to the document. At the same time, three sectors will suffer the most: livestock products, metals and machinery. These three sectors account for 53% of a total expected decline in exports to Russia, which totals 12.9 %.

New trade restrictions are another step in the ongoing process of deterioration of trade relations between the two countries. This resulted in a decline in Ukrainian exports to Russia to $4.8 billion in 2015, compared with $19.8 billion in 2011, or almost a quarter. A similar situation is seen with imports from Russia. Thus, the process of economic disintegration between the two neighboring countries is taking place very quickly, the authors concluded.

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