You're reading: Expert: Present conditions in Ukraine mean no GDP growth in 2014

The conditions prevailing in Ukraine in 2014 mean there will be no upward pace of the country's GDP growth this year, and the average hryvnia exchange rate to the U.S. dollar could be around Hr 9.60/$1, the director of the Institute for Economics and Forecasting of Ukraine's National Academy of Sciences, Valeriy Heyets said on March 12.

“It would be good if [GDP growth in 2014] was zero. I think that
inflation could be calmly increased to 8 percent. The deficit of the budget
depends on how revenues from those areas that were out of taxation could
be taken,” he said.

He said that financial aid and credits of the International Monetary
Fund, some countries would not be able to influence the pace of GDP
growth in the short-term outlook.

“Aid is one thing and credits are another thing. If there are credits
that are to be repaid in two years, it is better not to spend them, as
we have a large debt burden. This will not impact the pace of GDP so
quickly. If everything goes and is invested into the economy, if credits
from the World Bank, EBRD and other credits come, this will influence
[GDP] at least in a 18 months. There is a lag: 35 percent of investments of the
current year start working for investment of the current year, while
65% of investment will work next year. If they start working this year,
and everything is logically postponed for 2015. If [GDP] was zero, we
should pray for this,” he said.

“The exchange rate in this situation is crystal-ball gazing. It would
be good if it were to remain less than Hr 10/$1. I think that Hr
9.60/$1 is enough to create reserves of price competitiveness. It would
be good if were no higher,” the expert added.