Highlight: NBU policy - WHERE THE NBU IS GOING
Politics: Russian invasion of Ukraine was condemned by most developed nations. The conflict is expected to be long-lasting.
Real Sector: Military conflict in Donbas resulted in sharp contraction of industrial output in July by 12.1% yoy as many companies of the region had to stop operation.
Energy sector:Ukraine might have problems with energy supplies in autumn and winter as storages of natural gas and coal might be insufficient.
Agriculture: The Parliament approved several laws, which are likely to expand access for Ukrainian agricultural producers to the EU market.
External sector: Merchandise trade deficit in July narrowed to USD 0.2 bn. Services trade balance also turned negative at USD 0.1 bn due to lower foreign tourists inflow to Ukraine.
Fiscal policy: Legislative changes approved in March and July ensured increase in central fiscal revenues by 8.9% yoy in the first eight months of 2014. Still, revenues and deficit remained lower than targets, which resulted in under-execution of expenditures.
Social policy:The Government plans to continue pension reform in the nearest future to restrict growth in central fiscal transfer to the Pension Fund.
Labour market: In July, average wage grew by only 2.6% yoy in nominal terms and dropped by 8.9% in real terms.
Monetary policy: In August, consumer inflation reached 14.2% yoy due to increase in prices for transport, pharmaceuticals, housing, water, electricity, gas and other fuels.
Exchange rate: In August, hryvnia weakened sharply from UAH 12 per USD to UAH 14 per USD. As a result, the NBU introduced harsh administrative measures to support national currency.
State debt: State debt in 2014 is estimated to reach near 60% of GDP.
