KIEV, July 28 – Ukraine's GDP will register a 3% decline for H1 and could fall 6% this year, First Deputy Economic Development and Trade Minister Anatoliy Maksiuta said at a briefing in Kiev.

He said that inflation this year could accelerate to 19%.

"This is the background on which the changes of the budget policy are seen," he said.

Due to the worsening of the macroeconomic situation, the government says that the compensation for the budget should total some UAH 31 billion.

Maksiuta added that the key factors of the worsening of the macroeconomic situation are warfare and trade sanctions imposed by Russia, which lead to the worsening of the situation with foreign investment.

He said that the Ukrainian engineering sector and some agricultural producers suffered from the restrictions in foreign trade most of all.

He also pointed at the retaining of the unfavorable price situation on the foreign ferrous metal and fertilizers markets.

As for the prospects of 2015, he said that growth in the range of 0.3-2% will be restored with inflation from 8.7% to 9.8% under various scenarios.

Commenting on the hryvnia exchange rate, Maksiuta said that it is not expected that the hryvnia will weaken further.

"It will remain at the [current] level: more or less depending on the situation," he said.

He said that the stabilizing factor is further cooperation of Ukraine with the International Monetary Fund.

As for the free trade zone with the European Union, the official said that the Ukrainian government is holding consultations with Russia on the influence of the zone on the economy of the neighbor country.

"We received documents from Russia expressing concern over separate aspects of the free trade zone with the EU. Now we're analyzing the list of concerns and holding consultations with them on the issue," he said.

He said that the list of remarks is rather large.

He added that losses from exports due to restrictions in trade with Russia are estimated at $5 billion, not taking into account defense enterprises. (om/ez)