IMF lowers forecast to no growth in Ukraine in 2013

The IMF announced on April 16 it lowered its GDP growth forecast for Ukraine to zero from 3.5% yoy, which it had estimated in October 2012 in its World Economic Outlook. The Fund also became more pessimistic also on Ukraine’s C/A deficit estimate, predicting it at 7.9% of GDP vs. 6.6% previously. Also, it revised its inflation forecast to 0.5% yoy from 7.4% yoy.

Alexander Paraschiy: The sharp macro forecast revision for Ukraine is not a typical move for the IMF, which usually corrects its estimates only marginally. In this atypical revision, we see a hint to Ukrainian authorities that without reforms and an IMF loan agreement, the economy could deteriorate by the year’s end.

The revised numbers are far below quarterly estimates offered by Ukraine’s Ministry of Economy and the Eastern Europe Consensus Forecasts report, which projected 1.2% and 1.5% yoy GDP growth in 2013, respectively. We are still keeping our GDP growth forecast at 1.6% yoy this year, in anticipation of strong agri-production growth.