GDP: The Institute expects real GDP of Ukraine (including Crimea) to drop by 3.5% in 2014. However, risks remain high as Russian annexation of Crimea and Russian-provoked unrest in the Eastern, make Ukraine’s future highly uncertain.
Fiscal Indicators: Amended legislation decreased risk of delays in wages and social payments in the public sector but situation remains difficult.
Balance of Payments: Current account deficit is projected to decrease to 5.6% of GDP in response to hryvnia depreciation. However, trade disruption with Russia and high price for Russian gas hamper adjustment.
Monetary Survey: Consumer inflation is projected to jump to 9.6% on average in 2014 in response to hryvnia depreciation and higher tariffs for gas and heating. Low consumer demand is expected to prevent inflation from going higher.
