In 2013 the global economic situation is expected to improve, which would allow Ukraine’s real GDP to grow by 1.3% despite slowdown of domestic demand.
The MEFU includes the IER’s forecast of the GDP and its components, disposable income and unemployment rate, fiscal indicators, balance of payments, inflation, exchange rate for current and next years. There are 12 issues per year. Quarterly issues (published in January, April, July and October) present new and revised estimates, while monthly issues focus more on recent trends and define the direction of possible forecast revision in the quarterly issue.
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In 2013 the global economic situation is expected to improve, which would allow Ukraine’s real GDP to grow by 1.3% despite slowdown of domestic demand.
Ukraine’s economy will start the new year with two main challenges: pressure on the exchange rate and insufficient fiscal revenues.
According to the preliminary Ukrstat estimates real GDP declined by 1.3% yoy in the third quarter of 2012 bringing GDP growth over nine months of 2012 to 1.1% yoy.
Overall, real GDP is expected to grow by 1.3% in 2012. Further slowdown in other countries, especially crisis in the EU, as well as domestic political instability are among major downside risks
Although economic activity in the second half of 2012 may be lower than expected we are still likely to keep our estimate of real GDP growth at near 1.9% in 2012 due to high estimates of real GDP growth in the first half of the year.
Overall, real GDP growth is likely to decelerate to 1.9% in 2012. High downside risks are mostly related to the crisis in the EU and further slowdown in other countries. Besides, political instability related to coming Parliament elections somewhat could hamper investments.
The Institute will revise downwards the real GDP growth from current 2.9%. The economic growth in 2013 might be slower than currently expected due to continued problems in the EU and high risk premium on external borrowing.
We believe that economy will be stagnating in the second quarter with a moderate rebound in the last two quarters. The approved increase in social spending is not likely to impact our GDP forecast significantly.
The Ukrstat revised quarterly estimates of real GDP for 2011, which were the base of our last forecast. Real GDP growth is likely to accelerate in 2013, but will remain moderate at around 4%.