Growth of Ukraine's gross domestic product (GDP) will speed up to 3 percent in 2017 while inflation rate will reduce to 8.1 percent (December 2016 to December 2017), according to a basic forecast of economic and social development of Ukraine for 2017, which has been approved by the Cabinet of Ministers of Ukraine on July 1.
“The main stimuli for progress are investment and external demand,” First Deputy Prime Minister and Economic Development and Trade Minister of Ukraine Stepan Kubiv said when presenting the scenario at a meeting of the government.
He noted that the approved basic forecast envisages fast and successful reform implementation with the assistance of international community and favorable business environment.
Kubiv added that the worst-case scenario foresees a 1.5 percent GDP growth with inflation rate being at 10.3 percent, while nominal GDP in 2017 is estimated at Hr 2.6 trillion in both cases.
He noted that the worst-case scenario envisages worse foreign economic environment and slow economy modernization processes.
Kubiv also said that, according to the basic scenario, economy growth in 2018-2019 would rise to around 4 percent per annum and, according to the second scenario, it would grow to 2 percent.
The first vice prime minister stressed that the state budget for 2017 will be drafted based on the development scenario with the GDP growth of 3 percent, because this figure is close to the estimates by the International Monetary Fund (IMF).
At the same time, if necessary these indicators will be updated, Kubiv added.
In turn, First Deputy Head of the Economic Development Ministry Yulia Kovaliv said that this year the ministry expects the GDP growth of 1 percent with inflation of 14 percent.
She added that last year Ukraine’s economy shrank by 9.9 percent with 43.3 percent inflation, which was mostly due to the war raging in Ukraine’s east, as well as economic restrictions by Russia.
In her words, the most serious risk is the possible escalation of the situation in Ukraine’s east.
Kovaliv said that experts expect further lowering of the discount rate by the National Bank of Ukraine, which will reduce the cost of loans for economic development.
In addition, the first deputy minister reported that in 2017 they expect a 5.4 percent increase in real wages against 5.1 percent this year.
According to her, the unemployment is expected to slide down from 9 percent to 8.7 percent.
At the same time, the industrial production growth next year is expected to come up to 3 percent from 1 percent this year, Kovaliv said.
Ukrainian Prime Minister Volodymyr Groysman for his part summing up the discussion saying that the country needs to set more ambitious tasks.
According to him, the slow pace of economic recovery is caused by improper reforms or lack of reforms, and the fact that from 45 percent to 60 percent of Ukraine’s economy is shadow economy.
