In its August report, the US Department of Agriculture (USDA) increased the forecast for the harvest of Ukrainian corn in 2022/2023 marketing year (MY, July-June) compared to July by 5 million tons – up to 30 million tons from 25 million tons, and its export estimate has been raised by 3.5 million tons to 12.5 million tons from 9 million tons.
According to a report on the website of the US Department of Agriculture, the estimate of domestic corn consumption in Ukraine has been increased by 1 million tons – from 9.5 million tons to 10.5 million tons.
In the new forecast, the agency also increased the forecast for wheat exports from Ukraine in 2022/2023 MY by 1 million tons – up to 11 million tons from 10 million tons, while the assessment of its harvest remained at the same level – 19.5 million tons. At the same time, the forecast for its domestic consumption in Ukraine was also left at the same level of 10.2 million tons.
In addition, the forecast for carry-over stocks of wheat at the end of the current marketing year has been reduced – from 5.24 million tons to 4.24 million tons compared to 5.84 million tons at its beginning.
According to the report, in general, the forecast for the feed grain harvest in Ukraine for 2022/23 MY was increased by 5.7 million tons – up to 37.46 million tons from 31.76 million tons, and its export – by 3.5 million tons, up to 14 .33 million tons from 10.83 million tons.
As reported, since the beginning of MY 2022/2023, Ukraine has exported 2.21 million tons of grain and leguminous crops, which is 2.1 times less than in the previous MY. The country supplied to foreign markets 1.45 million tons of corn (26.1% more than in 2021/2022 MY), 562 thousand tons of wheat (3.2 times less), 192 thousand tons of barley (8.4 times less) and 5.1 thousand tons of flour (3.2 times less).
The forecast for the harvest of grain and oilseeds in Ukraine this season has been improved by approximately 5-7 million tons – up to 65-67 million tons from 60 million tons, according to the website of the government portal on Wednesday.
It is specified that the increase in the harvest forecast was announced by the Minister of Agrarian Policy and Food Mykola Solsky during a conference call between Prime Minister Denys Shmyhal and the heads of regions.
In turn, the Prime Minister noted that in the context of the Russian military invasion in Ukraine, 12 million tons of new crop grain have already been harvested from a total area of 3.5 million hectares.
Shmyhal also announced the emergence of additional opportunities for grain exports due to the unblocking of the Odessa seaport under the Istanbul Agreement on the export of agricultural products from Ukraine, concluded on July 22 under the auspices of the UN.
“In total, in June we exported 3.2 million tons out of 5 million tons (pre-war monthly volumes – IF-U) that were required. Exports are gradually growing both by rail, by road, and through the Danube ports. Sea ports will significantly expand these opportunities and farmers will receive new opportunities for the sale of products. The state is doing everything necessary for this,” the Prime Minister’s government portal quotes.
Shmygal also noted the recently introduced grant program for the development of horticulture, greenhouses, the development of processing and micro-enterprises, under which over 5,000 applications have already been submitted and processed, and this week the first applicants will receive state support.
As reported, the US Department of Agriculture in the July report predicts the harvest of Ukrainian wheat in the 2022/2023 marketing year (MY, July-June) at the level of 19.5 million tons, its export – 10 million tons, domestic consumption within the country – 10.2 million tons . The corn harvest is estimated at 25 million tons, export – 9 million tons, domestic consumption – 10.7 million tons.
In early July, the Ukrainian Grain Association (UGA) increased the forecast for the harvest of grains and oilseeds in Ukraine in 2022 by 4.4% compared to the May forecast, to 69.4 million tons from 66.5 million tons.
According to her forecasts, in 2022 the wheat harvest is expected at the level of 20.8 million tons (+8.3% to the organization’s May forecast); 27.3 million tons of corn (+4.6%); 6.6 million tons of barley (forecast kept); 9 million tons of sunflower (forecast kept); 2.2 million tons of soybeans (+4.7%); 1.5 million tons of rapeseed (+13.3%).
The World Bank has downgraded its inflation forecast for Ukraine to 20% by the end of 2022 from its April forecast of 15% inflation, Arup Banerji, World Bank Regional Country Director for Eastern Europe (Belarus, Moldova and Ukraine), has told Interfax-Ukraine.
“Inflationary pressures are rising. Consequently, at this stage, inflation is expected to continue rising and could reach 20% in December against 15% in our April forecasts,” Banerji said in an exclusive interview with Interfax-Ukraine.
Banerji said that the rise in inflationary pressure is particularly because of the need to cover budgetary requirements in March-May.
“International partners have acknowledged the financial challenges, thus they have committed around $20 billion in financial assistance to Ukraine. Despite these significant commitments, the timing of repayments will continue to be critical in order to meet Ukraine’s current needs,” the World Bank regional director said.
The World Bank has also maintained its forecast for a sharp contraction of 44% in Ukraine’s GDP in 2022.
“However, owing to the length of the war, when hostilities continue in several regions of Ukraine, we cannot be sure of our preliminary forecasts for a recovery in the medium term relatively,” Banerji said.
The World Trade Organization (WTO) has downgraded its forecast for global trade growth in 2022 from 4.7% (in the October version) to 3.0%, noting that the Russian war against Ukraine threatens the fragile recovery of world trade, the WTO report says. published on Tuesday.
The outlook for the global economy deteriorated after Russia’s invasion of Ukraine, “prompting WTO economists to reconsider their forecasts for world trade for the next two years,” the paper notes.
The organization now expects merchandise trade to grow by 3.0% in 2022, below its previous forecast of 4.7%, and by 3.4% in 2023. But these estimates are less accurate than usual because for the changing nature of the war, the authors of the review note.
“The most rapid economic impact of the crisis has been a sharp rise in commodity prices. Despite their small shares in global trade and manufacturing, Russia and Ukraine are key suppliers of essential commodities, including food, fuel and energy products and fertilizers, the supply of which is now Grain deliveries through the Black Sea ports have already been stopped, which could lead to serious consequences for the food security of poor countries,” the WTO said.
The vast majority, namely 83% of members of the European Business Association (EBA), forecast growth of their business in 2022, while a year ago 60% members said this, according to Business Forecast 2022 conducted by the European Business Association together with Nestlé Ukraine.
“In 2022, the vast majority, namely 83% of the respondents, forecast growth of their business, 15% of the directors assume it will be possible to sustain their business performance at the level of 2021, and only 2% expect some deterioration in their business situation (14% last year),” the EBA said.
According to the press release, the companies have significantly improved the financial forecasts for next year. Most entrepreneurs, namely 67%, forecast income growth by 10-20% – in hryvnia. This figure returned to the level of 2020 after a significant decline in the past.
Thus, 36% of directors expect revenue growth of up to 10% in volume terms, and almost half (49%) expect a 10-20% growth, the EBA said.
All respondents to this year’s survey note their plans to increase the salaries of their employees in 2022. Most managers, namely 55%, plan to increase salaries by 5-10%. Other 30% will increase salaries by 10-20%. It should be mentioned that last year 15% of the companies were not able to increase staff salaries.
The companies are enthusiastic about the plans to create new jobs. Thus, last year 60% of companies did not plan any changes in their staff, while this year their number is only 36%. The majority, namely 58% of the top managers, plan to expand their staff. And only 6% of the companies will be forced to reduce staff.
One-third of the entrepreneurs, namely 32%, plan to implement new investment projects next year with a budget from $20,000 to $400 million. Moreover, we are pleased to note that almost half of the respondents (49%) plan to invest in social initiatives aimed at supporting Ukrainian society next year.
“Such optimistic forecasts of the directors are certainly very uplifting. Maybe, for the first time since the pandemic broke, we can talk about a significant improvement in the assessments and sentiments of the top managers regarding their own business plans,” EBA Executive Director Anna Derevyanko said.
The CEOs also identified the top three tasks from business to the government for next year. It’s been the second year in a row that the first need mentioned is the need for judicial reform and the rule of law, the second is the fight against corruption, and the third is the need to ensure political stability and effective management in the country. Also, this year, the directors highlighted the importance of further reforming the tax and customs sectors.
Altogether, 95 CEOs of the EBA member companies took part in the Business forecast 2022 study, conducted in September 2021.
Oxford Economics has downgraded the forecast for Ukraine’s GDP growth in 2021 to 4% from 4.4% in the July forecast, and the risks of further lockdowns and expectations of tightening fiscal and monetary policy led to a deterioration in the forecast for economic growth in 2022 from 4.2% to 3.5%.
The disappointing Q2 data prompted us to cut our 2021 GDP growth forecast to 4% from 4.4% last month. And with Ukraine’s vaccination rate being one of the lowest in Europe, the COVID-19 infection rate may rise sharply again, according to the forecast of Oxford Economics for August.
According to the analysts, due to the lack of vaccines and hesitation regarding vaccination, the proportion of fully vaccinated is kept at less than 7% of the population. These factors pose significant downside risks to short-term growth forecasts.
Oxford Economics expects inflation to average 9.2% this year, with further declines to 6.7% and 5.4% in 2022 and 2023. At the same time, the hryvnia exchange rate on average in 2021 is projected at the level of UAH 28.4/$1, in 2022 – UAH 29.3/$1, in 2023 – UAH 29.4/$1.
As for further cooperation with the International Monetary Fund (IMF), the resumption of the Stand-By Arrangement this year, Oxford Economics considers it unlikely, since the government manages the proceeds from two issues of eurobonds. The upcoming peak public debt repayments will help cover $ 2.7 billion from the new IMF SDR allocation.
In 2022, Ukraine will have to pay $ 6.5 billion on public debt. This year, Ukraine may miss the chance to receive a new tranche of the IMF due to lack of political will. In this case, the resumption of cooperation with the fund next year remains probable, the forecast says.