KIEV, Oct. 25 – The European Bank for Reconstruction and Development has lowered its GDP growth forecast for Ukraine in 2012 to 1% from 2.5%, according to the EBRD's pre-election overview of Ukraine's economy.

The EBRD projects that average annual inflation in 2012 will be 4% against a previous forecast of 1.5%.

"Ukraine's macroeconomic situation remains fragile. Latest bouts of global and European instability and de-leveraging by the EU banks have negatively affected Ukraine's economy. Fiscal deficit is rising as the authorities have increased social spending before the October parliamentary elections. Risk of exchange rate devaluation that could negatively affect financial sector stability is high," the overview says.