Page 17 - BNE_magazine_bne_September 2019

bne September 2019 Companies & Markets I 17
(FSU) that has not been through this process and remains the poorest country in Europe as a result.
In July, the National Bank of Ukraine (NBU) revised its economic growth forecast for 2019 to 3% y/y compared with its April macroeconomic forecast of 2.5% y/y. The NBU also revised its 2020 economic growth forecast to 3.2% y/y from 2.9%. The revisions were attributed to "stronger domestic demand, more favorable terms of trade and expectations of a larger harvest of grain crops".
Domestic demand will remain the main driver of economic growth over the coming years. Private consumption growth will decelerate, albeit remaining high owing to an increase in real household income - wages, pensions and remittances from abroad. Capital investment will continue to expand rapidly, which will also provide significant support to the economy,
the NBU added.
On this score Ukraine will follow it neighbours to the were the countries of Central Europe have managed to shake
off the effects of a notable economic slowdown in “old Europe” thanks to their strong domestic demand that held
up growth, bne IntelliNews reported yesterday. Ukraine has already started re-orientating its economy from Russia to the west, but linking itself to these dynamic economies just across the border will help lift Ukraine.
But economic growth will be dampened by weak global economic activity and a decrease in gas transits to "European countries starting in 2020, due to the construction of bypassing gas pipelines," the statement reads.
Ukraine GDP quarterly growth % y/y
Ukraine faces a potentially debilitating clash with Russia’s Gazprom this winter. Its gas transit contract expires that could mean the Russia stops transiting gas to its European clients via Ukraine in a move that would cost the country some $3bn a year, or 3% of GDP. Ukraine has been pumping gas into underground storage at record levels to prepare for its coming gas war, the national gas company Naftogaz told bne IntelliNews in an exclusive interview.
In March, the Ukrainian Economy Ministry 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 2020 growth of 3.8% y/y, and in 2021 of 4.1% y/y, according to local media.
The same month, Prime Minister Volodymyr Groysman said that the Ukrainian government forecast economic growth of over 3% y/y in 2019.
The International Monetary Fund (IMF) has kept its forecast for Ukraine's GDP growth in 2019 and 2020 unchanged at 2.7% y/y and 3% y/y respectively.
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% y/y from 3% y/y. The multinational lender's also forecasts that the nation's economy will expand by 3% y/y in 2020.
The EBRD believes that large payments on public debt scheduled for 2019-2020 pose a serious risk to the economic development of Ukraine. Therefore maintaining co-operation with creditors remains vital for the recovery of the country's economy.
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