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Kiev will not sustain economic losses from the temporary loss of Donbas – German experts

Economically Ukraine will experience loss of the occupied by the pro-Russian separatists and Russian troops of industrial Donbas without essential problem, informs German newspaper Frenkfurter Allgemeine with the link to the report of the Group of German consultants cooperating with the government of Ukraine.

Kiev will not sustain economic losses from the temporary loss of Donbas – German experts

In case of separation of Donbas, as it is said in not yet published document, there might happen ‘significant reduce in the volumes of Ukrainian export due to the essential place of the Eastern Ukrainian metallurgy industry in the  external trade of Ukraine, this can cause the next loss of the value of the national currency. However, from the other hand, the loss of Donbas will bring economic advantages as well: government would not need to provide significant subsidies for social sphere and not profitable coal mines.’

The loss of the region, as marked by the authors of the research, will bring Kiev ‘temporary difficulties’ that will need the engagement of the foreign assistance, but ‘any more serious problems should not be expected’.

Kiev will not sustain economic losses from the temporary loss of Donbas – German experts

The research is based on economic targets of 2013 and does not consider destruction caused by the ‘Russian intervention of 2014 and Ukrainian response attacks’ and that will lead to the essential increase ‘of yet not small expenses for Donbas in case of its theoretical return to Ukraine’.

‘Many industrial companies and mines are no longer functional,’ – the document says.

According to the leader of the group of German consultants and expert of consulting company Berlin Economics Ricardo Giucci, the results of the research could not be considered ‘as a justification of separation of Donbas from Ukraine’.

Kiev will not sustain economic losses from the temporary loss of Donbas – German experts

‘Research presents the economic facts. Political and humanitarian consequences are the topics for separate analysis,’ – emphasizes expert. – Ukraine would survive even without Donbas. Ukrainian economy will become smaller, but not weaker.’

According to him, lack of tax will not be significant as Donbas was granted release of the value added tax for exported goods and has never brought large contributions to the budget.

Kiev will not sustain economic losses from the temporary loss of Donbas – German experts

In total, as predicted in the research, in case of separation of Donbas Ukrainian GDP would reduce for 8.4% while industrial production would reduce for 15%. However, at the same time budget deficit would essentially reduce as Ukraine has been experiencing it for long time. Ukrainian economy will survive the loss of coal and metallurgy production from Donbas as one can purchase the similar quality production in other countries.

Kiev will not sustain economic losses from the temporary loss of Donbas – German experts
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