The World Bank has lowered its forecast for Ukraine's GDP growth in 2012 from 5% to 2.5%, senior economist at the World Bank's mission in Ukraine Ruslan Piontkovsky said at a press conference in Kyiv on Thursday.
According to the World Bank's updated forecast, inflation is expected at 9.4% in the country in 2012, compared to the previous prediction of 10%.
The World Bank also lowered its inflation forecast for 2011 - from 11.4% to 5.6%. At the same time, it is keeping its previous forecast for 2011 GDP growth at 4.5%.
It kept its forecast for 2013 inflation at 7.4% but lowered its GDP growth forecast for that year from 4.5% to 4%.
"Our base scenario envisages a deceleration in economic growth to 2.5% in 2012, since Ukraine is entering a period of decreased external demand, more difficult access to financing and instability on global markets. This variation of how events will develop foresees a gradual exit from the crisis in the eurozone. (…) They key element in this scenario is a quick resumption in the International Monetary Fund's (IMF) program," Piontkovsky said.
Ukraine currently has limited access to external financing because of the situation on international markets, he said.
Given that Ukraine will need to refinance its external commitments of over $50 billion in 2012, this could put additional pressure on the country's balance of payments, he said.
Another factor that could pose a challenge to improving the budget deficit in 2012 is the parliamentary elections - the burden on the budget for implementing social projects could grow on the eve of the elections, he said.
Piontkovsky added that according to the World Bank's estimate, Ukraine's budget deficit for 2011 could exceed the level of 3.5% of GDP that was agreed upon with the IMF.
In June 2011, the World Bank predicted that Ukraine would have GDP growth of 5% in 2012, whereas it had previously forecast it at 4.5%.
The World Bank expects GDP growth to slow in 2013 to 4.5%.
It previously forecast inflation at 10% for 2012, compared to an earlier estimation of 8.9%. For 2013, the World Bank forecast that inflation would slow to 7.4%.
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