The fall of GDP in Ukraine in 2014 will be 6.5%, with inflation exceeding 15% due to the decline in domestic demand and exports to Russia, analyst for economic affairs of the International Centre for Policy Studies Oleksandr Zholud has said.
“We expect the fall by the end of this year to reach 6.5%, for the next year – the increase to reach 4%,” he said, introducing a new center forecast at a press conference at Interfax-Ukraine.
The expert noted that the IMF expects Ukraine’s GDP in 2014 to decline by 5%, and the EBRD – 7%.
According to Zholud, enterprises in the country in 2014 will not be able to compensate for the loss of the Russian market that will affect the economic dynamics, while the hryvnia devaluation, the rise in fuel prices and the increase in tariffs will accelerate the growth rate of prices.
Zholud also suggested that if the situation stabilizes the hryvnia rate might return to the level of Hr 11.00-11.50 per $1, while now it remains at about H 12.00 per $1.
According to the center, in 2014 for the first time since the crisis of 2009 private consumption will reduce substantially – by 10% year-on-year due to the reduction in real income and the deterioration of crediting conditions.
The expert said there had been a drop in payment discipline in the eastern regions of the country and the emergence of additional problems with the public repayment of foreign currency loans.
According to senior analyst for economic affairs of the center Vasyl Povoroznyk, bank loans in 2014 will remain expensive, which will affect the dynamics of GDP.
In addition, he said that further consolidation in the banking sector is expected.
According to executive director of the Independent Association of Ukrainian Banks Serhiy Mamedov, who attended the press conference, the stabilization of the political situation will help restore confidence in banks and the weakening of devaluation pressure.
“When the political side of the issue is resolved, everything will be restored. There will be time to engage in reforms, if there are reforms – investment will come, when investment come – the exchange rate will return to its place,” he stressed.
Mamedov also said that the government should help restore lending to the economy through the implementation of sectoral programs.
According to the center, to ensure comparability with historical data the forecast includes the territory of occupied Crimea, despite a lack of adequate statistics from this territory.
