Ukraine's nominal GDP in 2012 will amount to less than Hr 1.5 trillion, which is lower than all the current government forecasts, according to the National Bank of Ukraine (NBU).
“We are estimating nominal GDP for the current year at less than Hr 1.5 trillion, or about $180 billion. If the hryvnia devalues, GDP in the U.S. dollar equivalent will automatically decline – the country will become poorer. Therefore, we should not manipulate the exchange rate, but change the structure of the economy,” the director of the NBU’s general economic department, Oleksandr Petryk, said in an interview with the Dilova Stolytsia (Business Capital) weekly.
As reported, according to official government forecasts, nominal GDP in 2012 under the optimistic scenario is expected to reach Hr 1.516 trillion and that under the pessimistic scenario – UAH 1.5 trillion.
Petryk also said the cooling of the national economy was due to a stronger cooling of the external environment compared to the forecast. According to him, foreign prices for metallurgical products, the share of which in goods exports amounts to 30%, had fallen by an average of 14% by September.
“In January-August industrial production in Ukraine decreased by 0.4%, and GDP growth was a mere 1.5%. The economy is currently supported mainly by the domestic demand due to the increase in the public’s real income and a lack of inflation. The retail sales turnover in the first eight months of 2012 in comparable prices grew by 16% from the same period last year. I think that the trend will continue in the coming months,” he stressed.
Petryk also said that devaluation would increase the cost of servicing external debts and worsen the situation with bad debts in the banking sector.
“Devaluation is a short-acting medicine. It must be taken in emergency situations, when there is no other way out. The sharp weakening of the national currency exchange rate with a slight lag entails an increase in all the prices,” said Petryk.
