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Ukraine economy shrinks 17.6 percent in Q1 as government struggles to cope with conflict

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KIEV, Ukraine — Ukraine's economy contracted by a stunning 17.6 percent in the first quarter of 2015 from a year earlier as the country struggles to cope with the impact of unrest in the industrial heartland of the east.

The State Statistics Agency said Friday that the rate of economic slowdown worsened in every quarter last year.

Eastern Ukraine, where many major industries and coalmines are located, has been the stage of bitter fighting between government and separatist forces since last April.

The bloodshed has sparked the flight of 1.5 million people and left more than 7,000 people dead.

This year's budget is predicated on an anticipated 5.5 percent drop in the size of the economy. Inflation is seen hitting at least 26.7 percent, although many economists believe it will be higher.

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