IMF downgrades 2019 Ukraine GDP forecast to 2.7% growth

The International Monetary Fund (IMF) expects
Ukraine’s GDP to increase 3.5% yoy in 2018 and 2.7% in 2019, according to its
World Economic Outlook (WEO) published on Oct. 8. The 2018 GDP forecast was
improved from 3.2% yoy growth estimated in April’s WEO, while the 2019 GDP
indicator was downgraded from 3.3% growth.

At the same time, the IMF improved its forecast of
2019 consumer inflation to 6.2% growth yoy from 6.5%, keeping unchanged its
2018 consumer inflation outlook of 9.0%.

The IMF improved Ukraine’s current account (C/A)
deficit estimate to USD 3.9 bln (from USD 4.1 bln) for 2018, but downgraded it
to USD 5.2 bln (from USD 4.4 bln) for 2019. The C/A deficit will not exceed 4%
of GDP during the forecast period of 2018-2023, according to the IMF.

The IMF’s outlook implies that the average UAH/USD
exchange rate (derived by dividing GDP in UAH terms by GDP in USD terms) will
amount to 27.07x in 2018, 28.66x in 2019 and 29.92x in 2020.

Evgeniya Akhtyrko: Following
the World Bank’s recent downgrade of Ukraine’s 2018 GDP forecast to 3.3%
growth, the IMF’s 2018 GDP forecast upgrade looks a bit
optimistic. At the same time, the IMF now shares the National Bank’s view of slowing economic growth in 2019.

The IMF has quite a pessimistic outlook on C/A
deficit growth. We currently expect the C/A deficit to reach USD 3.1 bln in
2018 and USD 3.7 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.