Ukraine's economy is expected to shrink by 15 per cent this year, the World Bank has said, far worse than the nine per cent previously predicted.
"The situation has deteriorated ... most seriously," Ruslan Piontkivski, the lead economist for Ukraine at the World Bank, said on Thursday.
The export-dependent country is one of the worst hit by the global economic crisis, after its economy shrank by 20 per cent in the first quarter of this year.
Analysts say Kiev is paying the price for failing to diversify its economy after the collapse of the Soviet Union, leaving it dependent on export markets.
The financial crisis has also further strained relations between Kiev and Moscow, which is concerned about how Ukraine will pay its debts for Russian gas.
Thousands of people protested against the rising cost of living and pay cuts in a public display of discontent over the country's economic crisis earlier this year.
"The fall in GDP has led to a reduction of income without which expenses are not going to be revised. All this increases the risk of the budget deficit," Piontkivski said.
He said the country could expect growth of one per cent in gross domestic product (GDP) in 2010.
But the country is experiencing some recovery, with analysts at Alfa Bank reporting that industrial output had risen 3.1 per cent in June from May.
The International Monetary Fun (IMF) released the second part of a loan package for Ukraine, expected to total $16.5bn, in May.
The IMF had forecast that Ukraine's economy will contract eight per cent overall this year.