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3.2 ​Macro outlook
The International Monetary Fund (IMF) upgraded its 2020 forecast for Ukraine’s real GDP to a 7.2% y/y decline from an 8.2% y/y drop, ​according to its World Economic Outlook (WEO) published on October 13. In 2021-2025, Ukraine’s GDP growth will range from 3.0% to 4.0%, the IMF predicted.
The IMF updated its 2020 consumer inflation forecast to 5.2% YTD, compared to 7.7% YTD in April’s forecast. It expects consumer inflation to speed up to 5.8% YTD in 2021 and cool down to 5.0% YTD in 2023-2025.
The IMF expects Ukraine’s current account (C/A) to reach a $6.2bn surplus in 2020, but it will switch to a $4.5bn deficit in 2021. The C/A deficit will not exceed 4% of GDP during the forecast period of 2021-2025, according to the IMF.
The IMF's outlook implies that the average hryvnia exchange rate (derived by dividing GDP in UAHterms by GDP in $terms) will amount to UAH27.20/$in 2020. In 2021-2025, the hryvnia average exchange rate will not exceed UAH28.10/$.
The IMF forecast of Ukraine’s 2020 GDP largely overlooks the country’s economic developments in recent months, which indicate the economic decline slowed quickly after the lockdown in March-May. With the IMF overestimating the 2020 downfall, the 2021 GDP outlook for 3.0% y/y growth might be irrelevant.
The IMF’s outlook for Ukraine’s C/A deficit in 2021-2025 is quite moderate. The flat forecast profile for the hryvnia exchange rate in 2021-2025 implies that the IMF expects the C/A deficit will be compensated by foreign currency inflow to the country’s financial account.
17​ UKRAINE Country Report​ November 2020 ​ ​www.intellinews.com