Experts predict Ukraine’s gross domestic product will grow by 4% in 2020. As the National Bank is consistently decreasing its basic interest rate – which is currently 11% – commercial banks have started to actively lend money to businesses. This will help Ukraine’s gross domestic product to grow by 4% this year, Tomas Fiala, CEO of the investment fund Dragon Capital, said at the European Business Association annual meeting on Feb. 6. In 2021, Fiala forecasts GDP to grow by 3.7%.
The National Bank of Ukraine, in turn, predicts 3.5% GDP growth in 2020 and 4% in 2021-2022, the bank said in its January 2020 quarterly inflation report. Inflation, meanwhile, is expected to be 5%. In 2019, GDP grew by 3.4% while inflation was 4.1%, according to the central bank.
The central bank also estimates that it needs to spend $9 billion in 2020 on paying off the country’s national debt. The sum will only account for 9.9% of Ukraine’s GDP. In 2019, however, the debt payments ate up 11.7% of the country’s GDP. The difference is caused by the 3.4% GDP growth over the year.
The Cabinet of Ministers is working to make it easier for Ukrainians to pay their gas bills. As part of the reform of Ukraine’s gas market, consumers now receive two bills: one for gas and another for its delivery. However, the government wants to unify these two payments in a single document, Prime Minister Oleksiy Honcharuk said during a speech in parliament, the Ekonomichna Pravda news site reported. “Two payments is the correct step, but it would definitely be more correct for the individual to receive them simultaneously in one document,” Honcharuk said.
The Business Ombudsman Council has saved Ukrainian business $730 million. The council estimates this to be the total positive financial effect it has had in Ukraine since it started to monitor state activity in relation to business in Ukraine in 2015. The watchdog reported that 62% of the complaints it has received from local businesses concerned tax issues and 12% of complaints were about pressure from law enforcement. Meanwhile, the watchdog has an annual budget of 1.5 million euros, funded through a donor account of the European Bank for Reconstruction and Development.
Ferrous metals exports drop by 27%. Ukrainian metallurgical enterprises have seen a decrease in revenues from exporting ferrous metals in January 2020 compared to the same period last year, Interfax-Ukraine reports, referring to the State Customs Service. In January, the metal producers earned $713 million through exporting metal, securing only 17% of all the exports made this month. The metal trade made up 24% of the country’s total exports last January.
After Brexit, the United Kingdom plans to abolish European Union duties on Ukrainian seamless steel pipes, Interfax-Ukraine reported. The duties would be abolished after the one year transition period, which ends on Jan. 1, 2021. At the same time, the U.K. wants to maintain duties on hot-rolled sheet metal made from unalloyed or other alloyed steel. Other EU-style trade restrictions affecting Ukrainian goods could also be lifted. Britain officially left the EU on Feb. 1.
NBU permits non-resident banks to trade in currency using hryvnia between banks. Nonresident banks can now sign agreements on the purchase and sale of foreign currency for hryvnias between one another, settling payments through correspondent accounts in Ukrainian banks, Interfax-Ukraine reports. This step is designed to contribute to further growth of competition and liquidity in the interbank foreign exchange market, as well as to increase the attractiveness of hryvnia assets for foreign investors, according to the central bank.
American Chamber of Commerce urges President Volodymyr Zelensky to veto bill on regulating cigarette trade margins. The ACC asked the president not to sign the draft bill 1049 passed by the parliament and sent for signing on Feb. 5. Once signed, the bill will set a centralized trade margin for the wholesale and retail of tobacco products. The bill is “bizarre for market economies and is inconsistent with many of Ukraine’s international obligations,” the ACC stated. “We are concerned about the draft law, which deprives companies of the right to determine their own prices and the compulsory distribution of revenues from the sale of tobacco products among market players.”
