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economy and global trade, a restrained fiscal policy due to the need to repay large amounts of government debt, and the tight monetary conditions necessary to bring inflation to the target," the National Bank of Ukraine (NBU) said in its Inflation Report for April 2019. In addition, the harvest of grain and oilseeds is expected to decline compared to the 2018 record. "These developments will be counterbalanced in part by better terms of trade, due to high prices for selected Ukraine's export commodities and lower natural gas prices," it said. NBU says private consumption will remain the main driver of economic growth. However, it will decelerate on the back of slower growth in real household income, such as wages, pensions and remittances from abroad. Investment demand will be dampened by the political uncertainty arising from the two elections in 2019.
In March, Ukrainian Economy Ministry has revised downward its forecast for the growth of Ukraine's real GDP in 2019 to 2.8% y/y from 3% y/y. The ministry also forecasts the 2020 growth at 3.8% y/y, in 2021 at 4.1% y/y, according to local media. The same month, the nation's Prime Minister Volodymyr Groysman said that the Ukrainian government forecasts the economic growth by over 3% y/y in 2019.
The European Bank for Reconstruction and Development (EBRD) has revised downward its forecast for the growth of Ukraine's real GDP in 2019 to 2.8% year-on-year from 3% y/y. The multinational lender's also forecasts that the nation's economy to grow by 3% y/y in 2010, according to Interfax. The EBRD added that "reforms and monetary policy easing are expected to support growth, with a recovery to 3% expected in 2020". The EBRD also said large payments on public debt scheduled for 2019-2020 pose a serious risk to the economic development of Ukraine. Therefore, maintaining cooperation with creditors remains vital for the recovery of the country's economy.
The International Monetary Fund (IMF) has kept unchanged its forecast for Ukraine's GDP growth in 2019 and 2020 at 2.7% y/y and 3% y/y respectively.
4.0 Real Economy 4.1 Industrial production
Ukraine's industrial output jumped 5.2% y/y in April, advancing from 2.1% y/y in March, due to accelerated growth in manufacturing and mining, the State Statistics Service reported on May 23. Seasonally adjusted output increased 0.9% m/m. In 4M19, industrial output increased 0.9% y/y.
Manufacturing output accelerated 7.4% y/y in April (after 5.0% y/y growth in March). In particular, output in machinery surged 10.8% y/y (vs. a 1.5% y/y decline in March). In addition, metallurgical production increased 9.9% y/y (vs. 8.9% y/y growth in March), and food production rose 6.6% y/y (vs. 7.3% y/y growth in March).
Mining output increased 6.0% y/y in April (vs 1.8% y/y growth in March). In particular, oil and natural gas output improved 6.3% y/y, and iron ore production rose 4.6% y/y. Meanwhile, coal production dropped 8.4% y/y. The supply of electricity and natural gas inched up 0.3% y/y in April.
Regionally, growth was strongest in the Rivne (29.7% y/y), Vinnytsia (28.6% y/y) and Sumy (24.6% y/y) regions. Declines were steepest in the Volyn (-6.6% y/y), Zhytomyr (-9.5% y/y) and Kyiv (-5.6% y/y) regions.
Restored growth in the machinery sector boosted industrial output in April. In
23 UKRAINE Country Report June 2019 www.intellinews.com