Government releases macroeconomic assumptions for 2009 budget

Yesterday Ukrainian government released macroeconomic forecasts for the next year’s state budget. The Cabinet projects GDP growth of 0.4% yoy, CPI of 9.5% yoy and PPI of 12% yoy in 2009. The Minister of Economy, Bohdan Danylyshin justifies such optimistic forecasts by expectations of global recovery in 2009, in particular, improvement of commodity markets. Andrii Parkhomenko: We contend that the government’s GDP forecast is unreasonably optimistic. We forecast GDP to fall 2.0% next year. According to the consensus forecast conducted by a Ukraine-based Institute for Economic Research, 70.5% of experts anticipate GDP to decline 1-6% in 2009. Inflation forecast also looks underestimated, given upcoming hike for natural gas and utilities prices.