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3.2 Macro outlook
The National Bank of Ukraine (NBU) has revised the nation's 2019 GDP growth forecast to 2.5% year-on-year (vs 2.9% y/y in the previous forecast), the regulator said in a statement published on July 10.
According to Ukrstat state statistics service, the country’s real GDP rose by 3.1% y/y in January-March , or 0.9% quarter-on-quarter on a seasonally adjusted basis.
The NBU believes that the forecast of 2018 real GDP growth of 3.4% y/y is still relevant. "Economic growth will continue to be mainly driven by private consumption, which in the current year will be fuelled by the persisting high rate of growth in real wages on the back of high migration," the statement reads. "Favourable terms of trade, a recovery in the industrial sector, together with greater access of Ukrainian exporters to foreign markets, will decrease the negative contribution of net exports to GDP."
However, in 2019, real GDP growth will stand at 2.5% y/y due to the waning effects of higher social standards, the tight monetary conditions required to bring inflation back to its target, as well as tight fiscal policy resulting from the need to repay large volumes of public debt.
In 2020, the real economy is expected to grow by 2.9% y/y. "Private consumption, additionally supported by rising remittances thanks to an increase in the number of labour migrants, will remain the main driver of economic growth in the medium-term," the NBU believes.
Meanwhile, investment growth will be restrained by businesses’ higher labour costs. However, the contribution of net exports will remain negative over the forecast horizon, as imports will satisfy a significant portion of domestic demand and capital investment needs, according to the regulator.
A key assumption of the above scenario is based on Ukraine continuing to carry out structural reforms, as provisioned in a $17.5bn support programme agreed with the International Monetary Fund (IMF) in 2015.
"These reforms are essential to delivering macro financial stability and sustainable economic growth in the long-term," the NBU believes. "Access to the official financing provided by the IMF and other international lenders will enable the government to secure financing on the international capital markets on reasonable terms."
Ukraine: Key economic figures and forecasts
2011 2012 2013 2014 2015 2016 2017e
Nominal GDP (EUR bn) 116.9 135.2 135.3 99.9 81.4 78.3 84.8
Nominal GDP per capita (EUR) 2,573 2,987 3,341 2,332 1,904 1,737 1,994
Real GDP (% yoy) 5.5 0.2 0 -6.6 -9.8 2.3 2.0
Consumer prices (avg, % yoy) 8 0.6 -0.2 12.1 48.7 14.9 14.5
Unemployment rate (avg, %) 8.7 8.2 7.8 9.7 9.7 9.7 9.3
General budget balance (% of -1.8 -3.8 -4.4 -4.9 -2.3 -3.5 -3
20 UKRAINE Country Report August 2018 www.intellinews.com