The Cabinet of Ministers of Ukraine expects the resumption of economic growth from the third quarter of 2020, Prime Minister Denys Shmyhal has said.
“We have macro forecasts of the Ukrainian economy from the Ministry of Economy, the IMF, the World Bank. All of these macro forecasts are converging. We expect the growth of the Ukrainian economy from the third quarter. Naturally, the second quarter failed due to quarantine,” the prime minister said during a press conference in Kyiv.
He called the economic situation complicated, however, according to him, the government does not expect surprises that will provoke a breakdown of the economy.
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.
The Ministry of Economic Development, Trade and Agriculture expects GDP to grow by 3.7% in 2020, Deputy Minister Serhiy Nikolaichuk has said. “Next year, we expect growth to accelerate to 3.7%,” he said during a press briefing.
The minister noted that the updated macroeconomic forecast would be published after it is approved at a government meeting.
The candidate for the post of chairman of the Verkhovna Rada (Ukrainian Parliament) of the ninth convocation from the Servant of the People faction, Dmytro Razumkov, has stated one of the tasks would be to achieve economic growth in Ukraine at the level of 5-7% next year. “Launching the mechanism of a rapid economic growth. Our goal is the economic growth of 5% to 7% as early as next year. In addition, this should be growth not only on paper, in statistics, but also consistent with what people feel every day in their life,” Razumkov said at a plenary meeting before voting for his appointment as chairman of parliament.
He also announced the need for deregulation, legalizing capital.
He also announced the task of optimizing the functionality of state bodies, eliminating duplication of their functions.
At the same time, he emphasized that one of the tasks would be to create conditions for fair and independent justice.
Ukrainian businesses predict further economic growth and the creation of new jobs in 2019 for the second year in a row, according to a survey of company heads conducted by the National Bank of Ukraine (NBU) in the fourth quarter of 2018. According to the website of the central bank, the growth of business activity is expected at enterprises of all types of economic activity, while the most optimistic enterprises are in the processing industry.
In the regional context, optimistic moods are preserved by companies from all regions, except for Kirovohrad. Enterprises from Ternopil and Lviv regions have the highest expectations.
“Expectations of high growth rates of economic activity are based primarily on the forecast of an increase in the total volume of sales of own produce, as well as investment spending on machinery and equipment,” the report said.
According to the National Bank, one-third of respondents expect that production will grow, and every second company believes that it will at least remain at the current level. The growth of the total sales of products and the improvement of the financial and economic state is predicted by respondents of all types of economic activity, except for enterprises of power and water supply sectors. Trade and processing enterprises have the highest expectations.