Ukraine 2014 GDP lowered to 1.0% by IMF

The International Monetary Fund announced on Dec. 19 it lowered its 2014 GDP growth forecast for Ukraine to 1.0% yoy from 1.1% yoy estimated in October. The Fund expects GDP to have fallen 0.3% in 2013 vs. previously projected growth of 0.4% yoy in October. The IMF expects CPI to have declined 0.3% this year and speed up to 1.6% in 2014. It projects the general budget deficit (including Naftogaz) at 7.7% of GDP in 2013 and 6.6% of GDP in 2014. The C/A deficit is estimated to stay above 8% of GDP till the end of 2014.

Alexander Paraschiy: The IMF estimates reflect our vision. We project a 0.8% GDP decline in 2013 and a 1.0% increase in 2014. Inflation estimates are also exactly in line with our view. Yet we do not expect the effective budget deficit and C/A deficit to be that high, especially after the Dec. 17 Moscow agreements in which Ukrainian President Viktor Yanukovych secured a USD 15 bln loan and a gas price discount of nearly a third. Still, the projections signal that the Fund has started seeing the real intentions of the ruling Party of Regions, which do not include any structural reforms.