The International Monetary Fund expects the real GDP in Ukraine to contract by about 5% percent in 2014 amid weak investor and consumer confidence, however Ukraine's economic prospects will improve in the medium-term. "Real GDP growth is expected to rebound to 2% in 2015, rising to 4%-4.5% in the medium term," the Fund said in the statement posted on its Web site.
According to the IMF forecast, the inflation is expected to spike temporarily in response to the exchange rate depreciation and gas and heating tariff increases, reaching 16% at end-2014.
The current account deficit should fall to about 4.5% percent of GDP on the back of the exchange rate adjustment and subdued domestic demand.
At the same time, the gross international reserves will stabilize at around 2.5 months of import coverage replenished by international assistance.
The currency devaluation and official borrowing are expected to push public sector debt up to 57% of GDP and external debt to just below 100% of GDP.
The IMF expects the unemployment rate in Ukraine to gradually decline from 8.5% in 2014 to 7.5% by 2016.
“Buoyed by the restored competitiveness, exports are projected to grow by over 6% a year in 2015–2016. By end-2016, inflation will fall to about 6% and the NBU will build its international reserves to cover nearly 4 months of imports,” the fund said.
