Ukraine 2016 GDP to grow 1.0%, CPI to grow 14%, minister says

Ukraine’s GDP will grow 1% in 2016 and consumer price inflation will grow 14.1%, estimated on Sept. 14 First Deputy Prime Minister Stepan Kubiv, as reported by the Interfax-Ukraine news agency. In 2017, Ukraine’s GDP will accelerate to 3% and the inflation rate will show to 8.1%, he said. Improving external markets and stronger investments will be driving the improvement, he said.

“The competitiveness of our products will be improving at markets,” Kubiv said, adding that the 2017 budget draft is based on this forecast.

The Economy Ministry, which is led by Kubiv, projects UAH 2,263 bln of nominal GDP in 2016, which will grow to UAH 2,585 bln in 2017.  The National Bank projects 1.1% real GDP growth in 2016 (+3.0% yoy in 2017), the IMF anticipates 1.5% real GDP growth (+2.5% yoy in 2017) and the World Bank projects 1.0% in real GDP growth (2.0% yoy in 2017), according to the Interfax-Ukraine news agency.

Alexander Paraschiy: The Economy Ministry’s 2016 projections almost perfectly fit our initial estimates of 0.9% yoy GDP growth and 14.5% yoy CPI growth. At the same time, we are less optimistic than the ministry about 2017 prospects. We estimate GDP increasing by 2.1% yoy in 2017 while consumer prices rising 8.9% yoy. 

Our main difference with the official view is the perceptions of external demand prospects. Unfortunately, we do not see a substantial revival of demand for Ukrainian commodities and services, which makes us rather skeptical about a fast recovery. Prospects of domestic demand also look gloomy amid slow income growth.