The National Bank of Ukraine (NBU) confirmed the forecast for 2018 inflation at 8.9% in April. “According to the estimates of the National Bank, the deviation of the actual inflation in April from the forecast is insignificant and can be leveled out in the following months. In addition, the monetary conditions are still tough enough to ensure a gradual decline in consumer inflation in accordance with the forecast of the National Bank (8.9% year-on-year at the end of 2018) and its return to the target range in mid-2019,” the NBU reported.
According to the State Statistics Service, in April consumer inflation continued slowing down for the third consecutive month and amounted to 13.1% year-on-year (compared to 13.2% in March). Inflation in monthly terms decreased from 1.1% in March to 0.8% in April.
“Although the National Bank expected inflation to decline year-on-year, its April figure slightly exceeded the forecast published in the Inflation Report for April 2018, mainly due to the influence of the most volatile components,” the National Bank said in a statement.
The National Bank at the end of October last year worsened the inflation forecast for 2018 from 6% to 7.3%, in January this year to 8.9%, while the Cabinet of Ministers from 7% to 9%.
The NBU, to curb price increases, from March 2 raised the refinancing rate to 17% from 16%.
The World Bank has kept the forecast for Ukraine’s GDP growth in 2018 at 3.5%, Lead Economist and Program Leader covering Belarus, Moldova and Ukraine Faruk Khan said in Kyiv on Tuesday.
“Economic growth is projected at 3.5% in 2018 if pending reforms in anticorruption, land markets, state-owned banks, and privatization can be advanced in the next few months. This would provide an important signal to investors. If reforms are delayed, growth could drop below current levels in an uncertain macroeconomic environment as financing risks rapidly increase,” the World Bank said in a press release.
According to the World Bank’s economic update for Ukraine, the growth outlook has become more uncertain, but safeguarding macroeconomic stability and completing key pending reforms by July 2018 to bolster investor confidence can help boost growth in the next two years.
“The complex political environment ahead of the 2019 elections is affecting reform prospects, but a window of opportunity exists to complete key reforms by July 2018. Reforms in land markets, the financial sector, anticorruption, and privatization would not only address medium-term growth bottlenecks, but also provide an important immediate signal to strengthen investor confidence,” the World Bank said.
The World Bank’s experts said that addressing macroeconomic vulnerabilities and containing inflationary pressures to reduce cost of funds for the private sector is also important to strengthen investor confidence. Under such a scenario with continued improvements in investor confidence, economic growth could improve to 3.5% in 2018 and 4% in 2019, with fixed investment growing by about 15%.