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Macroeconomic forecast

  • Macroeconomic Forecast Ukraine – quarterly issue - Risks of the forecast remain high

    03.07.2014

    Executive summary

    In this forecast real figures are based primarily on the like-to-like approach, where impact of economic developments in occupied Crimea is excluded. However, nominal indicators are based on 2013 figures that include Crimea.

    GDP:Real GDP is expected to decline by 3.5% in 2014. Crucial assumption that makes our forecast possible is that unrest in the Eastern part of Ukraine will calm down by the end of summer and the confrontation with Russia will not reach open war.

    Improved investment climate, higher domestic and external demand are forecasted to result in real GDP growth at 1.6% in 2015.

    However, risks of the forecast remain high. Under pessimistic scenario real GDP may decline by over 10% in 2014, and it might continue declining in 2015.

    Fiscal Indicators:State debt is expected to increase to near 54% of GDP in 2014. It might decline to 53% of GDP in 2015.

    Balance of Payments: In 2014 current account deficit is expected to shrink to 4.6% of GDP, while financial account surplus is projected at 2.4% of GDP. Balance of payment is forecasted to be in surplus in 2015.

    Monetary Survey: Further large utility tariff hike in July, continued transmission of direct effects of hryvnia depreciation will contribute to even higher inflation by December 2014 at 17.0% yoy. Prolonged period of low inflation (in 2011-2013) will help inflation to decelerate in 2015 after exchange rate volatility subsides.

     

    Issue:  No. 6 (81) June 2014

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