The economic growth in 2017 will be again supported by the increase in domestic demand. Sharp increase in minimum wage is expected to contribute to higher real private final consumption. It will somewhat restricted the investment growth. Larger domestic demand will stimulate imports growth. Exports growth will be limited by weak external demand and logistic problems. According to the IER baseline scenario, real GDP in 2017 is projected to grow by 2.8%. If disruption of economic relations with the occupied part of the Donbas continues we might downgrade our projections. However, we expect the impact of prolonged blockade of the Donbas to be moderate.
We expect that consumer sentiments and business confidence will improve in 2018, while global economic growth will remain moderate. Reforms introduced in 2014-2017 are projected to reduce friction in the economy. As a result, real GDP is forecasted to increase by 3.3% in 2018.
