Kiev, Sep 10 (IANS): Ukraine's economy is beginning to show signs of stabilisation after almost two years of free-fall, a senior World Bank official said here on Thursday.

"We are seeing tentative signs of stabilisation: the fiscal deficit has been lessened, the banking sector is stabilising and the outflow of capital has been halted," Fan Qimiao, the bank's country director for Belarus, Moldova and Ukraine, told an economic forum on Ukraine's reforms.

He said that the stabilisation of Ukraine's local currency and the growth of the country's foreign exchange reserves are also indicating that the economy is performing better, Xinhua reported.

Ukraine is expected to pull out of recession in 2016, Fan said, adding that the East European country needs to follow through on structural reforms to emerge from its worst economic crisis in decades.

"If Ukraine wants to achieve growth next year, it has to keep macroeconomic stability and continue its structural reforms in the banking, energy and judicial sectors, as well as in other areas," Fan said.

Ukraine plunged into recession in early 2014 due to political instability and the conflict in its eastern regions, which generate over a quarter of the country's industrial output.

Ukraine's gross domestic product dropped 6.8 percent last year and the government has projected that it will further shrink by 8.9 percent this year.