World Bank lowers Ukraine 2015 GDP forecast to -12%

The World Bank lowered the real GDP forecast for Ukraine to -12% in 2015 compared to -7.5% estimated previously.  For 2016, the Bank projects 1% real GDP growth. Nominal GDP is estimated to reach UAH 1,958 bln in 2015 and UAH 2,373 bln in 2016. The World Bank expects average inflation to be 50% in 2015 and 23.4% in 2016. The C/A deficit is expected to narrow to 1.1% of GDP in 2015 and to widen slightly to 1.4% of GDP in 2016. Gross international reserves are projected to reach USD 18.3 bln in 2015 and to grow further to USD 22.7 bln in 2016.

Alexander Paraschiy: In general, the World Bank forecasts are in line with our view. We also do not expect fast GDP recovery, estimating a 10.4% real GDP drop in 2015 and a very timid (0.6%) GDP growth in 2016. At the same time, we are more pessimistic about external trade prospects. For the moment, we are observing a slowing imports decline, while exports do not look to recover soon in light of steadily falling resource prices. Against this backdrop, we project the C/A deficit to reach 2.5% of GDP in 2015 and 4.2% of GDP in 2016.  Subsequently, our estimate of gross international reserves for 2015 is less optimistic at USD 16.9 bln. For 2016, our gross international reserves forecast is in line with World Bank estimates at USD 22.7 bln.