The economy slowed growth after blockade of the occupied Donbass. Results and forecasts of the NBU
The national Bank summed up the economic results for the first months of 2017 and says that GDP growth slowed after the start of the trade and transport blockade of the occupied Donbass. Therefore, the NBU has lowered the forecast on growth of economy and inflation.
The updated economic forecasts of the national Bank of Ukraine
Year
Inflation
GDP
2017
9.1% of
1.9% of
2018
6,0%
3,2%
2019
5,0%
4,0%
“Inflation will deviate from the center point of the target range, as predicted earlier, only this year – at the end of the year inflation will amount to 9.1% mainly due to the increase in domestic demand and production costs, due to a double increase of the minimum wage in the beginning of the year. In particular, core inflation will rise to 6.5% and the growth of prices for raw products will accelerate to 7.8%”, – noted in the NBU.
The regulator notes that “a termination of movement of goods across the line of clashes within the Donetsk and Luhansk regions will not have a significant impact on the level of consumer inflation.”
However, the closures of the occupied Donbass will affect Ukraine’s GDP, the growth of which in 2017 will slow to 1.9%. In 2018, the economy will grow by 3.2%, and in 2019 – 4%.
“In 2017, economic growth will slow to 1.9% due to the fall of production in some industries due to the ceasing of movement of goods across the line of clashes within the Donetsk and Luhansk regions and seizure of enterprises located in areas outside the control. Most significantly, the revision of the forecast was influenced by the expected increase in foreign trade deficit. This happens due to the reorientation of enterprises in the energy and metal sectors on imported raw materials for replacement of a lost resource base, as well as the loss of production capacity of export-oriented industries”, – explained in the national Bank.
The regulator also expects the growth of its international reserves, including through cooperation with the IMF: at the end of 2017 to 21.1 billion U.S. dollars in 2018 – up to 26.2 billion U.S. dollars.