IMF expects Ukraine GDP to increase 4% in 2021

The IMF has updated its World Economic Outlook
database in which it forecasts Ukraine’s real GDP will increase 4.0% in 2021
and about 3.4% in the next two years. In this way, the fund sees Ukraine’s
economy will grow slower than the global one (6.0% in 2021 and 4.4% in 2022,
based on IMF estimates) and slightly below the euro area (4.4% in 2021 and 3.8%
in 2022).

The IMF expects Ukraine’s nominal GDP will reach UAH
4,606 bln (USD 165 bln) in 2021, or 12.6% higher yoy. It expects Ukraine’s CPI
will increase to 7.2% by end-2021 (from 5.0% as of end-2020) and will gradually
slow down to 5.0% by 2024. The fund also expects that Ukraine’s current account
balance will switch from a USD 6.6 bln surplus last year to USD 4.2 bln deficit
in 2021 (numbers comparable to those observed in 2018-2019). It expects
Ukraine’s debt to GDP ratio will decrease to 58% in 2021 and 45% in 2026 (from
61% in 2020).

The IMF numbers imply the fund is expecting stability
for the Ukrainian hryvnia vs. the dollar, as the UAH/USD rate is expected to be
on average 28.0 in 2021 and between 27.6 and 27.8 in the next five years.

Alexander Paraschiy: The IMF’s estimates of Ukraine’s GDP are based on preliminary
statistics for 2020 (the actual nominal GDP and real growth, as recently
reported by UkrStat, were better). Therefore, the IMF’s GDP outlook numbers for
2021 might look irrelevant. In any case, the IMF’s real GDP outlook for Ukraine
is close to ours (+4.1% in 2021), and so is the CPI outlook (we expect 7.2% YTD
in 2021). At the same time, we see some better current account development for
Ukraine in 2021 (expecting a small surplus this year) as well as see a somewhat
stronger hryvnia in 2021 (average exchange rate 27.6 UAH/USD).