The NBU has updated the forecasts worsened the growth and stability of the discount rate

National Bank has revised the economic forecasts for Ukraine, and worsened some of them.

In particular, GDP this year will grow by 1.6% instead of the previously estimated 1.9 percent.

“The Outlook revision occurred because of the worst results of economic activity in the first half of the year, particularly in the service sector, and because of revisions to estimates of the grain harvest. Will remain low performance of the sectors most vulnerable to the rupture of industrial relations with the uncontrolled territories (mining and metallurgical complex, energy, transport),” – said the regulator.

In 2018, the Ukrainian economy is expected to grow to 3.2%.

“First of all, this will contribute to the gradual easing of fiscal and monetary policies that will stimulate consumer demand. Economic growth will support the improvement of the investment attractiveness of the economy and export growth amid improving trading conditions and high yields. However, the recovery in domestic consumer and investment demand will be satisfied mainly by imported products,” – noted in the NBU.

Indicators of inflation in the next two years will be within previously announced targets: 8% (plus/minus 2%) in 2017 and 6% (plus/minus 2%) in 2018). Accordingly, the regulator has retained the same forecasts of inflation for 2017-2018 – at 9.1% and 6.0%, respectively.

“The acceleration of General inflation to 13.5% in may and about 15% in June was slightly higher than the trajectory of the National Bank forecast published in the Inflation report (April 2017). This was primarily due to the appreciation of raw food. Higher prices for meat and dairy products on the world market has intensified the export of domestic products, resulting in its offer in the domestic market declined. And the loss of yield as a result of spring frosts and to increase the supply of more expensive imported goods affected domestic prices for vegetables and fruits”, – said the NBU.

Given the negative trends, the regulator left unchanged the discount rate at 12.5% per annum.

International reserves of the NBU rose to 18 billion dollars, and net purchase of foreign currency control at the beginning of the year is more than $ 1.3 billion.

“A key assumption of this scenario is the forecast of the further cooperation with the International monetary Fund, which remains an important source of replenishment of international reserves of the country. Together with the surplus of consolidated balance of payments to obtain financing, according to the EFF program will increase the international reserves to 20 billion USD at the end of 2017 and up to 27 billion USD at the end of 2018. Also, the accumulation of reserves will contribute to the government’s use of funds from the special confiscation directly to make payments on the public debt”, – noted in the NBU.

Note that the national Bank of Ukraine expects this year to 3 billion dollars under the program of cooperation with the IMF.