Ukraine's economy could have contracted by nearly a quarter in the first few months of 2009, becoming one of the fastest-shrinking in Europe, Victor Yushenko, the president, has said.

"For the first quarter, we expect a fall of 20 per cent ... maybe 23 per cent," Yushchenko told a business forum in Kiev on Monday.

Yushchenko criticised the government of Yulia Tymoshenko, the prime minister, saying "no effective measures have been taken" to address the problem.

Yuschenko said that the government had wanted to "wait three of four months" for the crisis to pass. 

"There is a risk of delays in payment of salaries, pensions and grants," he said.

Tymoshenko's office declined to comment on Yushchenko's figures, saying she was on a foreign trip.

Falling output

Yushchenko and Tymoshenko were political allies during the so-called Orange Revolution in 2005, but as the economic crisis has deepened they have been accused of political point-scoring ahead of next year's elections.

Ukraine enjoyed annual growth averaging seven per cent between 2000 and 2007.

But the country's vast steel sector, which has received investment from global giant ArcelorMittal and others, has been battered by falling demand during the global downturn.
  
Industrial output has dropped 32 per cent in the first three months of 2009. 

Anastasia Golovach, an economist with investment bank Renaissance Capital Ukraine, told The Associated Press output in the construction industry also fell by nearly 50 per cent, the transport industry shrank by about 25 per cent and trade fell by 17 per cent.

She said that those figures meant that Yushchenko's forecast was probably over-optimistic and predicted the economy could have contracted by up to 30 per cent.

'Signs of stabilisation' 

However, Olena Belan, an analyst with Dragon Capital, said: "Despite the catastrophic figures, the economy continues to  function, even if at a slower pace.

"Signs of stabilisation are evident."

Earlier this month, the International Monetary Fun (IMF) released the second part of a loan package expected to total $16.5bn after demanding revisions to the government's financial plans.

The IMF has forecast that Ukraine's economy will contract eight per cent overall this year while the World Bank puts the downturn at nine per cent.