Kiev - The Ukrainian government worsened official predictions for the economy on Wednesday, halving expected annual GDP growth for 2009 to between 3 and 4 per cent.

The former Soviet republic's economy already has moved into a full recession, with GDP contracting 2 per cent during December alone, and annual inflation standing at 21 per cent, a Ministry of Economy official said.

Ukraine's Ministry of Economy as recently as June had been estimating that the country would over the course of 2008 see 7 per cent annual GDP growth, and 15 per cent inflation.

Falling government revenues due to lower GDP growth had placed Ukraine's 2009 state budget in jeopardy, and a budget review was "critical" said Serhy Romaniuk, Vice Economics Minister, at a Kiev press conference.

Ukraine's pro-Europe government had for more than a month dragged its feet on even admitting the economy was teetering, with officials claiming international economic weakness would leave Ukraine's GDP growth and inflation numbers practically unchanged.

Political chaos making Ukraine's leaders unable to deal with the crisis effectively was a key cause for the Kiev government's unwillingness to admit the economy was in trouble, observers said.

Ukraine's parliament has been without a ruling coalition since September. Ukrainian President Viktor Yushchenko called for new elections to be held December 15, but in-fighting between political factions and a state cash shortage has prevented Yushchenko's administration from preparing for the vote, and placed the poll in doubt.

Rewriting the national budget to take into account worsened economic performance was impossible, Romaniuk conceded, because the hung parliament would be unable to consider new legislation, and due to the rapid weakening of the national currency, the hryvna.

Independent observers have for some time been pessimistic on the Ukrainian economy, with Fitch Ratings predicting Ukrainian 2008 GDP growth of 4.5 per cent, and inflation in excess of 25 per cent, according to an Interfax news agency report. (dpa)