The beginning of 2016 is associated with downward trend for prices on commodities, which puts additional pressure on Ukraine’s exports. Decline in prices for imported crude oil and gas does not compensate for lower nominal exports, which results in higher than previously expected exchange rate vulnerability. Demand for foreign currency also increased due to high fiscal spending in the end of 2015 as well as increased depreciation expectations associated with crash in global stock markets and stalled IMF program.
However, the IMF is most likely to provide next tranche of the loan within the next few months and liquidity of foreign exchange market is expected to increase in spring. This should help calm down volatility of the exchange rate. The fiscal position of the Government remains comparatively strong. The Government is expected to continue reforms implementation, which would also result in additional support by official international donors. Overall, real GDP is expected to grow by 1.7% in 2016.
The recovery in 2017 will be based on increase in external and domestic demand. Real gross value added is expected to grow in all sectors, except for agriculture. More stable economic and political situation as well as conducted reforms will contribute to improvement of the investment climate. As a result, real GDP is forecasted to increase by 3.2%.