Analysts from Investment Capital Ukraine (ICU) in July downgraded the forecast for Ukraine's GDP growth in 2012 by 1.6 percentage points compared to the April expectations, to 1.9%.
“On the background of stagnation in industry, the worsening European
debt crisis, which affects the Ukrainian exports, and modest
expectations regarding the crop harvest, we forecast that GDP growth in
2012 will be 1.9%. We also downgraded the forecast for real GDP growth
in 2013 and 2014 by 1.5 and 1.7 percentage points (3.1% and 4.0%)
respectively,” said the company’s press service.
According to the revised estimates, inflation in the country in 2012
will amount to 4.4%, whereas previously the figure was estimated at
6.8%. The inflation forecast for 2013-2014 remained unchanged at 8.7% to
5.4% respectively.
ICU believes that the budget deficit in 2012 will reach 3.6% of GDP, and in 2013-2014 the figure will reduce to 3.1% of GDP.
“The increased need for funding the national budget will be
accompanied by an even greater concentration of the authorities’ efforts
to control tax and fee payments, the continuation of the active
privatization of state enterprises, as well as borrowing on the domestic
and international debt markets,” reads the report citing the head of
the ICU analytical department, Oleksandr Valchishen.
As reported, the government in the national budget for 2012 foresaw
Ukraine’s real GDP growth at 3.9% with 7.9% inflation, after economic
growth in 2011 of 5.2% with inflation at 4.6%. GDP in 2011 amounted to
69.3% of the 1990 GDP level, compared to 65.8% in 2010 and 63.3% in
2009. However, this is still below the 74.2% that the country achieved
in the pre-crisis year of 2008.
The group analysts also downgraded the forecast for the deficit of
the country’s account of current operations in 2012, to 5.4% from 4.9%
of GDP.
“This change in the forecast reflects the high inertia of the price
of imported natural gas, as well as the volume of domestic demand
supported by public subsidies,” said Valchishen.
According to the report, the average import price for natural gas in
2012 is estimated at $419 per 1,000 cubic meters, which is 28% up from
the average price last year.
“The market pressure on the hryvnia exchange rate will be retained
until the end of 2012. At the same time, interest rates on the market
will remain high, as the government will defend the hryvnia exchange
rate from pressure. Interest rates could fall after the IMF program is
unblocked, which is expected to happen after the parliamentary elections
in 2012,” reads the statement.
ICU Group, which provides services on trading in securities,
investment and banking services, as well as manages the assets of joint
investment institutions, was established in 2006. It consists of an
investment company and an asset management company.
