The Ukrainian Grain Association (UGA) in the April report updated its forecast for the harvest of grain and oilseeds in the 2020/2021 marketing year (MY) compared to March, to 94 million tonnes from 92.6 million tonnes.
According to the association’s Thursday press release, the forecast for grain and oilseeds exports for next season is also increased from 55.6 million tonnes to 57.2 million tonnes.
According to the association, in the current marketing year, Ukraine produced 98 million tonnes of grain and oilseeds, exports can reach 60 million tonnes.
The association said that a slightly decrease in the forecast for the harvest of grain and oilseeds in 2020 does not change the upward trend of the last three years, when Ukraine harvested more than 90 million tonnes. In the medium term, gross harvest in the country will approach 100 million tonnes and will continue growing.
The forecast for the harvest and export of wheat in the next marketing year has not changed compared to the March report and will reach 25.8 million tonnes and 18 million tonnes, respectively.
The association said that in 2019, Ukraine had a record-hitting wheat harvest of 28.2 million tonnes, and exports, according to its estimates, will reach 20.2 million tonnes in the 2019/2020 marketing year.
The forecast for corn harvest in the April report of the association increased from 34.3 million tonnes to 36.8 million tonnes, and export for the next season from 27.5 million tonnes to 30 million tonnes. Thus, Ukraine in the 2020/2021 marketing year may break its own record for the current marketing year, when 35.2 million tonnes were harvested with an expected export of about 28.5 million tonnes, the association said.
At the same time, the association decreased the forecast for barley harvest compared to the previous month forecast from 7.96 million tonnes to 6.8 million tonnes, and export for the next season from 4.5 million tonnes to 3.5 million tonnes.
According to its estimates, in the current marketing year in Ukraine, some 9 million tonnes of barley were grown with the planned export of about 4.6 million tonnes.
The Ukrainian Grain Association is an association of producers, processors and large exporters of grain, which annually export about 90% of Ukrainian grain products.
The Ministry of Energy and Environmental Protection of Ukraine has included in the forecast balance of electricity generation in the Integrated Power System (IPS) of Ukraine for 2020 the growth of electricity imports at twice compared to the actual indicator of 2019, to 5.615 billion kWh.
According to the updated balance posted on the ministry’s website, electricity exports are also expected to grow by 30%, to 8.455 billion kWh.
The electricity generation will decrease by 1.2% compared with the actual indicators of 2019, to 152.105 billion kWh. In particular, nuclear power plants expect to reach 80.639 billion kWh of electricity generation (2.9% less compared to 2019), thermal power plants 42.129 billion kWh (6.2% less), combined heat and power plants and cogeneration plants 11.064 billion kWh (1.8% more), all hydroelectric power stations 5.088 billion (22% less), pumped storage plants 1.258 billion kWh (6.6% less), block stations 1.643 billion kWh (7% less), and alternative energy sources 10.284 billion kWh (85.6% more).
Thus, according to forecasts, the share of nuclear power plants of the structure of electricity generation in 2020 will be 53.02% (53.91% at the end of 2019), thermal power plants some 27.7% (29.17%), combined heat and power plants and cogeneration plants some 7.27% (7.06%), hydroelectric power stations some 3.35% (4.24%), pumped storage plants some 0.83% (0.87%), block stations some 1.08% (1.15%), and alternative energy sources some 6.8% (3.6%).
Electricity consumption in the country is expected to reach 147.517 billion kWh in 2020, which is 1.8% less compared to the actual indicators of 2019.
Electricity consumption of pumped storage plants in the pump mode is predicted to be 1.752 billion kWh (1.834 billion kWh in 2019).
The U.S. Department of Agriculture (USDA) in March raised its forecast for the export of major oilseeds from Ukraine in the 2019/2020 marketing year (MY, September-August) by 460,000 million tonnes compared to the forecast in February, to 5.51 million tonnes. According to a March report released on the USDA’s website, the forecast for rapeseeds export was increased by 200,000 tonnes to 3 million tonnes, soybean exports by 310,000 tonnes to 2.45 million tonnes.
At the same time, the U.S. Department of Agriculture lowered its forecast for oilseeds processing by 200,000 tonnes to 17.42 million tonnes, meal exports by 110,000 tonnes to 5.77 million tonnes, and vegetable oil exports by 60,000 tonnes, to 6.6 million tonnes.
The USDA forecasts that in the 2019/2020 MY exports of sunflower oil from Ukraine will be at the level of 6.2 million tonnes, sunflower meal at 4.9 million tonnes, sunflower at 60,000 tonnes.
In addition, the U.S. Department of Agriculture predicts a sunflower crop in Ukraine at 16 million tonnes, production of sunflower meal at 6.5 million tonnes, sunflower oil at 6.78 million tonnes.
The U.S. Department of Agriculture (USDA) in February revised upwards the forecast for export of corn from Ukraine in the 2019/2020 agricultural year (July-June) by 0.5 million tonnes compared with the January forecast, to 31 million tonnes, and the corn harvest – by 0.3 million tonnes, to 35.8 million tonnes.
According to the February report posted on the USDA website, the forecast for production and export of Ukrainian wheat remained at the January level – 29 million tonnes and 20.5 million tonnes respectively.
USDA in February did not change the forecast for production and export of Ukrainian barley leaving it at 9.5 million tonnes and 5 million tonnes respectively.
In general, grain forecast for the 2019/2020a agri-year was revised upwards by 0.39 million tonnes, to 75.43 million tonnes and exports – by 0.53 million tonnes, to 56.6 million tonnes.
The World Bank has improved the forecast for Ukraine’s GDP growth in 2019 from 3.4% to 3.6%, World Bank Senior Economist Anastasia Golovach has said.
“For 2019, we do not expect any surprises and we think that Ukraine’s GDP will grow by 3.6%. A good indicator, but external risks, in some way, are increasing for Ukraine, so the structural transformation of the economy is important,” she said at a press conference in Kyiv on Tuesday.
She noted that maintaining the current rate of economic growth will require an increase in capital investment, which amounted to 10% last year. This will require a greater influx of foreign direct investment.
At the same time, the bank kept forecasts of economic growth in 2020 at 3.7% of GDP, in 2021 at 4.2%, she said.
According to the banker, the deficit of the balance of payments in Ukraine in 2019 is expected to reach 3.1% of GDP, however, due to the potential loss of gas transit revenues and the unfavorable situation in the world markets, this figure will increase in 2020 and 2021 to 3.6% and 3.8% of GDP.
“But subject to rapid reforms, we expect in the next month that Ukraine will be able to maintain the economic growth rate at 3.7% in 2020 and accelerate it to 4.2% in 2021,” Golovach explained.
“An important factor in reducing pressure on the budget deficit is control over current budget expenditures and a balanced reduction in the minimum wage this year – only at the level of 12%, which is very contrasted with the previous years,” Golovach said.
Moreover, according to her, inflation will continue the downward trend: from 9.8% at the end of last year to 6.4% by the end of this year, as well as 5.5% and 5% in 2020 and 2021 respectively.
According to the bank’s expectations, in 2019 the deficit of the national budget of Ukraine will show a decrease to 2.1% in 2020 and 1.9% in 2021.
The World Bank believes that the level of public debt of Ukraine will also continue to decline this year to 51.7% of GDP. At the same time, the bank maintained the forecast for its further growth in 2020 and in 2021 to 54.6% and 55.3% of GDP respectively.
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.
