The economic growth of Ukraine in 2020 will be 3%, according to the basic macroeconomic forecast prepared by the analytical department of Alfa-Bank (Kyiv).
“We expect Ukraine’s economy to maintain moderate rate of growth in 2020, adding another 3% after 3.3% in 2019. This would be the fifth year of economic recovery in a row (only in the 2000s, Ukraine did enjoy a longer growth period),” according to the forecast posted on the bank’s website.
“Growing consumer demand should be the major driver for the economy next year. We also expect further expansion in investment, supported by maintained macro-financial stability and declining interest rates. However, economic growth would be limited by global economic cool down, some worsening in terms of trade (that is, the ratio of prices for key exports and imports), limited foreign direct investment, cutbacks in margins of some big sectors, and tighter labor market with regard to demographic challenges,” it says.
“Macro-financial stability, coupled with tight monetary policy, low imported inflation, and limited current needs in upward reviews of administratively regulated prices would facilitate further slowdown in inflation. However, strong growth in wages and consumer demand would exert some upside pressure on prices. We expect the growth in the Consumer Price Index (CPI) to slow down from current 7.5% to 6.3% at the end of 2020,” according to the document.
The bank said the foreign exchange market will remain stable: the average annual hryvnia to U.S. dollar exchange rate is to be close to the indicators of 2017-2019. The average annual hryvnia exchange rate in 2020 will be UAH 26.65/$1, the bankers stated.
“Economic growth, maintained macro-financial stability, moderate fiscal deficit and declining interest rates would ease the debt burden for the state. According to our estimates, the public debt to GDP ratio will go down from 60.9% in 2018 to 52.7% in 2020,” the bank said.
