Ukraine's central bank downgrades GDP growth forecast over Donbas blockade

Ukraine's central bank on Thursday lowered its estimate for the country's gross domestic product (GDP) growth this year, citing the negative impact of the blockade in the industrial eastern region of Donbas on the economy.

According to the revised forecast, the Ukrainian economy will grow 1.9 percent this year, down from the central bank's January projection of 2.8 percent.

"This downward revision resulted from expectations that the hold on trade in eastern Ukraine and the loss of the production facilities located in the rebel-controlled areas will decrease the output of some industries," the bank said in a statement.

The export-oriented metallurgical and mining industries, as well as coke production and electrical industry, will be hit by the blockade the most, the statement said.

In the same time, the negative effects of the blockade will be partially offset by the projected good demand on the Ukrainian products on the global market, it said.

Since late January the trade between the government-controlled and non-government-controlled areas in eastern Ukraine has been suspended as activists had blocked the movements of cargo trains.

The blockade has triggered the energy crisis in Ukraine, causing the deficit of anthracite coal, which is used in electricity production and metallurgy.

The Ukrainian economy grew by 2.3 percent in 2016 compared with a consolidated decline of 16.5 percent over the previous two years. Endit