Page 16 - UKRRptDec21

3.2 Macro outlook
The IMF predicts Poland will grow by 5% and the world economy will grow by 5.9%. For Ukraine’s upside, Oleh Ustenko, a presidential advisor, said that due to the strong hryvnia, “the volume of GDP in dollar terms is now at the level of the historical maximum and this year will reach $180-185 billion -- this is even higher than pre-war figures.” He estimated to Interfax-Ukraine that half of Ukraine’s economy is off the books, a phenomenon that depresses official figures.
IMF downgrades Ukraine's GDP growth estimate to 3.2% from 3.5% in the October forecast. However, the IMF has unchanged Ukraine's economic growth expectations in 2022 at 3.6%, and in 2023 3.4%.
Ukraine will end 2021 by recording the highest dollar GDP since independence. The Minister of Economy, Yulia Sviridenko, announced that the economy will reach its highest rate of GDP in US dollars ($195 bln) by the end of 2021. "Next year, we plan to reach a high growth rate of GDP due to the launch of several programs such as mass thermal modernization of residential buildings, comprehensive restoration of irrigation systems in southern Ukraine, mass cheap mortgage lending, active financing of exporters," said Sviridenko.
J.P. Morgan has sharply downgraded its forecast for real GDP growth in Ukraine in 2021 from 4.5% to 2.3%, while maintaining its forecast for GDP growth in 2022 by 5%, according to the materials of the November EMEA Emerging Markets Research.
J.P. Morgan has sharply revised GDP growth for 2021 to 2.3% from previously expected 4.5%. They keep the forecast for GDP growth for 2022 at 5% and nominal GDP for 2021 at record $197 billion (from 2022 – at the level of $227 billion).
J.P. Morgan analysts point out that the preliminary estimate of GDP growth in Ukraine in July-September of this year at 2.4% in annual terms announced by the State Statistics Service was disappointing, as J.P. Morgan envisioned growth of 6.7% for this period, the National Bank expected 4%, and the consensus forecast provided for 3.6%.
At the same time J.P. Morgan admits the risk of weaker growth in the fourth quarter and, as a result, growth of 2% or less in 2021.
Analysts believe inflation peaked in October, but core inflation has yet to peak. Overall, in 2021 J.P. Morgan expects inflation at 9.4% and 8.3% in 2022. The current account deficit at the end of the year will amount to 1.2% of GDP, next year it will deepen to 2.3% of GDP. At the same time, analysts predict the state budget deficit in 2021 at the level of 3.9%, compared with 5.5% laid down in the law on the state budget for 2021.
J.P. Morgan expects the hryvnia exchange rate in October-December this year and in January-March 2022 will be at the level of UAH 26.3/$, in April-June next year – UAH 26.5/$, and in July-September – UAH 26.8/$.
16 UKRAINE Country Report December 2021 www.intellinews.com