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UPDATE 2-Ukraine aide sees 2010 GDP growth up to 3 pct

Published 11/16/2009, 08:51 AM

* Production hits bottom, trying to grow-aide

* Industrial output rises in October

* Trade deficit narrows as imports slump

(Adds quotes, background, industry and trade data)

KIEV, Nov 16 (Reuters) - Ukraine's economy is likely to grow by up to 3.0 percent next year, a presidential aide said on Monday, compared with an expected contraction of up to 15 per cent in 2009.

"For next year a correct figure for the growth of the Ukrainian economy seems to me to be in the order of up to 3 percent," Oleksander Shlapak, an economic adviser to President Viktor Yushchenko, told journalists.

Shlapak said that gross domestic product (GDP) growth was expected to contract by 14-15 percent in the fourth quarter of 2009 compared with the same period for 2008.

The aide's forecast for 2010 GDP growth was lower than a 3.7 percent forecast by the economy ministry issued in September, but roughly in line with estimates by the International Monetary Fund which has a $16.4 billion loan programme with Ukraine.

Production and exports in vital sectors such as steel and chemicals have been hard hit by the global crisis and the ex-Soviet state has one of Europe's worst performing economies.

"We are in a situation of production stagnation. We have reached the bottom and are trying to push ourselves off it," he said.

But success depended on reviving vital sectors such as metallurgy and chemicals as well as internal sectors for which there was a stable internal demand such as food production and agriculture.

Analysts and officials expect the economy to show some recovery in the second half of this year on the back of a global economic turnaround.

Shlapak's forecast coincided with release of figures by the State Statistics Committee that showed that industrial output fell 6.2 percent in October year-on-year but grew 5.0 percent month-on-month.

In January-October, output fell 26.4 percent year-on-year, compared to a rise of 2.2 percent in the same period last year. Production dropped 28.4 percent between January and September 2009.

The State Statistics Committee said Ukraine's steel sector output -- which includes raw steel and other metals and alloys -- fell by 33.4 percent in January-October 2009 compared to the same period in 2008, but rose by 7.3 percent in October over the previous month.

The sharp contraction in the economy this year was also illustrated in trade data for September, released Monday.

Exports in the first nine months of 2009 totalled $34.320 billion against $62.466 billion in the same period in 2008, while imports fell even faster to $35.399 billion from $72.684 billion a year earlier.

Analysts expect the trade account to be balanced, or close to, as a deep economic recession has reduced demand for imports, while a much weakened hryvnia currency has made Ukrainian exports slightly more attractive. [ID:nLG372674]

(Reporting by Yuri Kuilokov, writing by Richard Balmforth; Editing by Toby Chopra)

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