The World Bank, taking into account the results of H1 2019, has improved its forecast for gross domestic product (GDP) growth in Ukraine in 2019 from 2.7% to 3.4%, expecting that it would accelerate to 3.7% and 4.2% in 2020 and 2021 respectively.
“If the new government is able to deliver on its ambitious reform goals, growth can increase to 4% by 2021,” the World Bank said in its October report entitled “Migration and Brain Drain.”
The analysts said that this will require progress in the following areas: reviving sound bank lending to the enterprise sector by completing the reform of state-owned banks; attracting private investment into tradable sectors by establishing a transparent market for agricultural land, demonopolizing key sectors and strengthening antimonopoly policy and enforcement, privatizing state-owned enterprises, and tackling corruption; and safeguarding macroeconomic stability by addressing current expenditure pressures, securing adequate financing, further reducing inflation, and rebuilding international reserves.
If reforms do not progress and adequate financing is not mobilized, growth could fall below 2% as investor confidence deteriorates, macroeconomic vulnerabilities intensity, and financing difficulties force a compression in domestic demand. Ukraine will need to safeguard macroeconomic stability and manage fiscal risks.
According to the expectations of the World Bank, in 2019, the deficit of the national budget o Ukraine would be 2.2% of GDP. The figure would decrease to 2.1% of GDP in 2020 and to 1.9% of GDP in 2021.
According to the World Bank’s forecast, the public debt will also continue to decline this year to 53% of GDP, but will grow in 2020 and in 2021 to 54.6% of GDP and to 55.3% of GDP, respectively.
As indicated in the materials, the current account deficit will continue to grow: in 2019 – to 3.5% of GDP, in 2020 – to 3.8% of GDP and in 2021 – to 4.3% of GDP.
At the same time, the bank expects a slow increase in net foreign direct investment (FDI) inflows in 2019 and 2020 to 2.2% of GDP and 2.3% of GDP, respectively.
At the same time, inflation will take a downward trend: from 9.5% at the end of last year to 6.8% this year, as well as 6% and 5.4% in 2020 and 2021, respectively.
According to the report of the World Bank’s experts, the main risk for the Ukrainian economy is formidable financing needs. So, according to the analysts, it will take about $11 billion per year, or 8% of GDP, to pay off government debt and finance the budget deficit in the current and next two years.
“To raise the necessary financing, it is critical to maintain the reform momentum and fiscal discipline, while continuing cooperation with development partners,” the bank said in the report.
Businesses plan their 2020 budgets with the forex trade set at UAH 28 per U.S. dollar, according to the “Global Outlook” study by the European Business Association (EBA).
“When planning the budget for next year, owners use the average forex rate at UAH 28 per U.S. dollar. According to investors, the hryvnia will continue strengthening, as last year the rate was at UAH 30 per U.S. dollar,” EBA Executive Director Anna Derevyanko said while presenting the findings of the study in Kyiv on Monday.
As many as 104 top managers of EBA member companies were surveyed in August 2019 during the study. Some 77% of those polled expect their business will develop in 2020, with 45% of CEOs forecasting revenue growth by 10-20%.
At the same time, compared with the forecast for 2019, the number of companies that intend to expand staff has decreased. As the survey showed, 47% of companies plan to leave the number of employees at the level of last year, and 46% of CEOs shared plans for expanding their staff (last year their share was 58%), Derevyanko’s cited the results of the survey.
Only 33% of companies intend to launch new investment projects in Ukraine in 2020, the study indicates.
At the same time, more than 90% of CEOs are going to raise employees’ salaries by 5-10%, the survey showed.
The study was conducted for the fourth year in a row.
The U.S. Department of Agriculture (USDA) reviewed downwards its forecast for exports of rapeseeds from Ukraine in the 2019/20 agricultural year (September-August) by 0.1 million tonnes compared with the August forecast, to 2.7 million tonnes.
According to the September report, published on the USDA website, the forecast for the export of Ukrainian soybean meal was reduced by 0.2 million tonnes to 0.7 million tonnes due to stronger domestic demand.
In general, the forecast for the export of oilseeds from Ukraine in September was reduced by 0.1 million tonnes compared to the forecast in August, to 4.75 million tonnes, meal exports – by 0.2 million tonnes, to 5.8 million tonnes, while at the same time, the forecast for the export of vegetable oil remained at 6.3 million tonnes, oilseed refining – at 17.15 million tonnes.
As reported with reference to the Ministry of Agricultural Policy and Food, in 2018, Ukraine harvested 13.7 million tonnes of sunflower, 4.4 million tonnes of soybeans, and 2.6 million tonnes of rapeseed.
Ukraine’s Agricultural Policy and Food Ministry has revised upwards its forecast for grain harvest in 2019 from 70.8 million tonnes to 71.1 million tonnes, the ministry reported on its website. The wheat production will total 27.8 million under the ministry’s forecasts.
According to the ministry, in September the ministry and market participants will decide on acceptable balance of grain exports and will sign a memorandum of understanding over the volume of grain exports in 2019/2020 agricultural year.
“The main document of the memorandum, the so-called agreement of understanding for 2019/2020 agricultural year, will be sent to all participants of the grain market before the end of this week,” the ministry said.
As reported, Agricultural Ministry and grain market participants in August 2018 memorandum envisaged 16 million tonnes of wheat export for 2018/2019 agricultural year against 16.5 million tonnes envisaged for a previous marketing year.
The U.S. Department of Agriculture (USDA) has reviewed downwards the forecast for export of Ukrainian wheat in 2019/20 agricultural year (July-June) by 0.5 million tonnes, to 19 million tonnes, and harvest – by 1 million tonnes, to 29 million tonnes, according to a July report of the USDA posted on its website. According to the report, compared with the June report, the forecast for the export of barley in 2019/20 agri-year was also lowered to 4.2 million tonnes (by 0.3 million tonnes) due to the deterioration of the forecast for the production of this crop to 8.5 million tonnes (by 0.5 million tons).
At the same time, the forecast for the export of corn has been increased to 28 million tonnes (by 1 million tonnes) with improving the forecast of the corn harvest to 34 million tonnes (by 1 million tonnes).
Thus, in general, the grain harvest forecast for 2019/20 agri-year in Ukraine has been reduced to 72.55 million tonnes (by 0.5 million tonnes compared with the June forecast), exports increased to 51.39 million tonnes (by 0.2 million tonnes).
As reported, Ukraine’s Agricultural Policy and Food Ministry predicts an increase in the yield of grain in 2019 to 70.8 million tonnes with a gross harvest of grain in the 2018/19 agricultural year at the level of 70.1 million tonnes.
On Tuesday, July 9, at 10.00, the press center of the Interfax-Ukraine news agency will host a press conference entitled “Results of Exports of Fresh Fruits and Berries in 2018-2019. Forecast for Harvest (and Ukrainian Exports) for 2019-2020 Season.”
Participants: Dmytro Kroshka, the chairman of the Ukrainian Association of Agrarian Export, Volodymyr Hurzhiy, an expert for exports at First Ukrainian Apples Producers Aggregating Company USPA FRUIT, Oleksandr Yaschenko, the deputy director for research of the Institute of Horticulture, and Oleh Bosy, the agricultural technologist and managing partner of FruiTech (8/5a Reitarska Street). Registration of journalists requires press accreditation.
AGRARIAN, BERRIES, EXPORT, EXPORTS, FORECAST, FRUITS, HARVEST, PRESS CONFERENCE, RESULTS
