IMF keeps unchanged 2019 Ukraine GDP forecast, worsens inflation outlook

The International Monetary Fund (IMF) kept unchanged
its 2019 forecast for Ukraine’s GDP at 2.7% growth, according to its World
Economic Outlook (WEO) published on Apr. 9. In 2020-2024, Ukraine’s GDP growth
will range from 3.1% to 3.3% yoy, the IMF predicted.

At the same time, the IMF worsened its forecast of
2019 consumer inflation to 7.0% YTD yoy from 6.2% YTD. It expects consumer
inflation to gradually slow down to 5.0% YTD in 2023. The IMF significantly
improved Ukraine’s current account (C/A) deficit estimate to USD 3.3 bln (from
USD 5.2 bln) for 2019 and USD 3.5 bln (from USD 5.2 bln) in 2020. The C/A
deficit will not exceed 4% of GDP during the forecast period of 2019-2024,
according to the IMF.

The IMF’s outlook implies that the average exchange
rate (derived by dividing GDP in UAH terms by GDP in USD terms) will amount to
UAH 28.68/USD in 2019, UAH 29.96/USD in 2020, and UAH 30.55/USD in 2021.

Evgeniya Akhtyrko: At the
moment, we are less optimistic than the IMF regarding Ukraine’s GDP growth in
2019. Expecting stagnation in industrial output and a slowdown in agricultural
production, we currently see Ukraine’s GDP growth at 2.3% yoy in 2019.

The IMF also has quite an optimistic outlook on C/A
deficit growth. We currently expect the C/A deficit to reach USD 5.1 bln in
2019. Meanwhile, we share the IMF’s view that annual depreciation of Ukraine’s
national currency will amount to 3%-5% during the forecast period.