Ukraine Finance Ministry projects 4.5% GDP decline in 2015

The Finance Ministry of Ukraine projects a 4.5% decline in real GDP decline and 13.4% CPI growth in 2015, deputy minister Denys Fudashkin stated during a press briefing on Nov. 21.  Nominal GDP is expected to reach UAH 1.72 trillion. “We have two scenarios. We will use the pessimistic one. We discussed this scenario with the IMF and our projections are quite close,” said Mr. Fudashkin.  According to the optimistic scenario, Ukraine’s GDP will decline 2.4% next year, CPI will amount to 11.5% and the budget deficit will reach 3.8% of GDP. Under the pessimistic scenario, the budget deficit will reach 5.3% of GDP in 2015.

Alexander Paraschiy: The MinFin projections look pessimistic only at first glance. For realistic budget planning, nominal GDP is much more important, for which MinFin projections are far from conservative. Its UAH 1.72 trillion nominal GDP projection is even a bit higher than the UAH 1.70 trillion we project, assuming real GDP growth of 1.3% yoy in 2015. So regardless of whether real GDP further declines in 2015, the authorities are hopeful for accelerating nominal GDP growth (up to 12% yoy vs. estimated 5% yoy in 2014) in what should improve budget collections next year.