Political upheavals and the widely criticised annexation of Crimea by Russia are taking their toll on the Ukrainian economy, with the country's banking sector facing a macroeconomic headwind that observers expect to remain throughout the rest of 2014.
Even before the loss of Crimea, Ukraine's gross domestic product (GDP) was expected to drop by 4% to 5% over the year. Now, practically every other macroeconomic indicator is also expected to decline. Stability is at a premium in the second quarter of 2014, as a senior advisor for the European Bank for Reconstruction and Development (EBRD), Anton Usov, notes. “The situation is so volatile that it is difficult to make even short-term forecasts. We do see this changing once the International Monetary Fund [IMF] package is signed, and Ukraine will need to follow some IMF guidelines,” he says.