Russia's Troika Dialog investment company has retained its forecast for Ukraine's GPD growth in 2012 at 3%, although it said the forecast could be revised downwards if the debt problems of Europe worsen.
"If the macroeconomic situation in Europe does not improve, it is not inconceivable that the Ukrainian economy will show a sluggish pace this year and its growth will be around 2%," reads a press release of the investment company.
Troika Dialog said that an important condition for retaining the GDP growth projection is growth in exports, including to the European Union, in the second half of the year. The share of Russia and Europe of total Ukrainian exports is 50%, so the prospects of the country’s economy will significantly depend on the development of the situation in the regions.
Established commercial liaisons with Russia could ensure certain benefits to Ukraine thanks to the high pace of growth in the Russian economy linked to the behavior of oil prices, the company said.
"However, the European prospects do not bode well for the real economic sector of Ukraine, apart from a short-term effect from the inflow of tourists for the Euro 2012 championship in June," reads the release.Troika Dialog said that Ukraine’s restricted opportunities to borrow on the international markets also worsen the situation.
According to the press release, the complicated foreign situation and low pace of inflation allow the Ukrainian government to smooth the monetary and credit policy, which could stimulate domestic crediting. However, there are restrictions for the application of credit and monetary tools in the form of not enough flexibility of the exchange rate and a risk of the fact that the budget deficit will be more than expected.
"If capital outflow and an unfavorable situation in foreign trade were to be seen, serious restrictions in liquidity could be seen, which, in turn, would hinder economic growth if the authorities do not give up the targeting of a nominal currency exchange rate," reads the release.
As reported, Ukraine’s GDP grew by 5.2% in 2011 compared to 4.2% in 2010. The government forecasted that real GDP will grow by 3.9% in the national budget for 2012, while today the government plans to retain the pace at 5-6%.
The World Bank and European Bank for Reconstruction and Development say that Ukraine’s GDP could grow by 2.5% in 2012.
