Ukraine's GDP is forecast to contract by 5.5% in 2020, followed by a recovery of 3.0% in 2021, according to the September Regional Economic Prospects of the European Bank for Reconstruction and Development (EBRD) published on Thursday.

"Risks to the downside remain considerable, reflecting uncertainty about future social distancing as well as policy and structural reform commitments during an extremely challenging time," the bank said.

In May, the EBRD expected Ukraine's GDP to contract by 4.5% and to grow next year by 5%.

The bank said that a COVID-19-induced recession in Ukraine in 2020 has come on top of major structural weaknesses in the economy, with most sectors in negative territory and a sharp fall in investments.

"Despite the challenging environment, a credible monetary policy has preserved macroeconomic stability, and the new IMF programme agreed in the midst of the pandemic has further stabilised expectations and mobilised substantial financing from the official sector and private investors," the EBRD said.

The bank recalled that GDP declined by 1.3% year-on-year in the first quarter of 2020 and The economy shrank by 11.4 per cent year-on-year in the second quarter of 2020. In the first half of the year the decline was 6.4% after growth of 3.2% last year.

According to the EBRD estimates, by the end of next year, real GDP will still be 1.6% less than the pre-crisis level, and it will be able to return to it in per capita terms only in the fourth quarter of 2022.