Macroeconomic forecast

  • Macroeconomic Forecast Ukraine - Stable instability


    We expect to revise 2016 real GDP growth forecast down to 1-1.5%. This reflects adjustments related to release of 2015 GDP and effects of recent exchange rate volatility on domestic demand. Political instability remains a source of downward risk for the forecast. While moderate amounts of political infighting are part of our base scenario, long-term political crisis may be more damaging as it may hurt confidence, delay reform agenda and derail cooperation with international donors.

    On the bright side, hryvnia exchange rate stabilised in March and immediate effect of hryvnia depreciation on consumer prices seems to be moderate. Inflation was also contained by low commodity prices and disruption in food exports. Increase in import costs will still contribute to inflation over next months but overall transmission of exchange rate may be lower than expected. This may lead us to revise our inflation forecast down.

    We do not expect major changes in our outlook for 2017. Economy is expected to return to growth in response to moderate increase in external demand, somewhat improved consumer and investor confidence, stable financial sector, and delayed investment demand. Real GDP is forecasted to grow by 3.2%.

    Issue:  No.3 (102) March 2016

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