KYIV, Nov 15 – Ukraine’s anemic economic recovery has continued to lose steam in the third quarter showing the government’s measures to reinvigorate the economy after the COVID-19 lockdown have largely failed.

Ukraine’s economy expanded a seasonally adjusted 1.4% in the third quarter from the second quarter, the State Statistics Service reported Monday. The economy grew 2.4% on the year in the third quarter.

The figures fall short of earlier projections. The National Bank of Ukraine has expected the economy to expand 4% on the year in the third quarter.

The released data suggest the economy is not likely to grow as fast as the government has expected in 2021, potentially creating massive budget deficit that will have to be financed through issue of debt or slashing of spending.

The government expects the economy to expand 4% on the year in 2021, but the NBU has recently lowered its economic growth forecast to 3.1% down from its earlier projection of 3.8%.

The release of the dismal figures comes less than two weeks after reshuffle of the government’s economic team led by First Deputy Prime Minister and Economy Minister Oleksiy Liubchenko.

Under Liubchenko’s leadership, Ukraine has stalled economic reforms and failed to secure lending program with the International Monetary Fund. Instead, the government went on a borrowing spree by raising high-interest debt on international and domestic markets.

Ukraine’s public debt rose almost 10% in the seven months to $92.5 billion as of June 30, up from $84.2 billion as of November 30, 2020, according to the Finance Ministry. The debt shot up 18% over the past 25 months with practically zero economic growth in the same period.

Liubchenko was replaced with Yulia Svyrydenko, President Volodymyr Zelensky’s top economic advisor, on November 4, and most of Liubchenko’s staff at the Economy Ministry had been replaced within following days.

Svyrydenko said Ukraine “must stop simply consuming public funds” and instead focus on making “well-thought-out investments” to accelerate the economic expansion.

The government pledged to focus on developing complex machinery manufacturing, such as shipbuilding, to create 50,000 new jobs within the next three years, Svyrydenko said.

Other sectors of the economy that the government plans to focus include energy, IT, agriculture, and construction. (tl/ez)