Ukraine's GDP growth in 2012 to slowdown to 1.9%
2012-07-27 16:23:45
Analysts from Investment Capital Ukraine (ICU) in July downgraded the forecast for Ukraine's GDP growth in 2012 by 1.6 percentage points compared to the April expectations, to 1.9%.
"On the background of stagnation in industry, the worsening European debt crisis, which affects the Ukrainian exports, and modest expectations regarding the crop harvest, we forecast that GDP growth in 2012 will be 1.9%. We also downgraded the forecast for real GDP growth in 2013 and 2014 by 1.5 and 1.7 percentage points (3.1% and 4.0%) respectively," said the company's press service.
According to the revised estimates, inflation in the country in 2012 will amount to 4.4%, whereas previously the figure was estimated at 6.8%. The inflation forecast for 2013-2014 remained unchanged at 8.7% to 5.4% respectively.
ICU believes that the budget deficit in 2012 will reach 3.6% of GDP, and in 2013-2014 the figure will reduce to 3.1% of GDP.
"The increased need for funding the national budget will be accompanied by an even greater concentration of the authorities' efforts to control tax and fee payments, the continuation of the active privatization of state enterprises, as well as borrowing on the domestic and international debt markets," reads the report citing the head of the ICU analytical department, Oleksandr Valchishen.
As reported, the government in the national budget for 2012 foresaw Ukraine's real GDP growth at 3.9% with 7.9% inflation, after economic growth in 2011 of 5.2% with inflation at 4.6%. GDP in 2011 amounted to 69.3% of the 1990 GDP level, compared to 65.8% in 2010 and 63.3% in 2009. However, this is still below the 74.2% that the country achieved in the pre-crisis year of 2008.
The group analysts also downgraded the forecast for the deficit of the country's account of current operations in 2012, to 5.4% from 4.9% of GDP.
"This change in the forecast reflects the high inertia of the price of imported natural gas, as well as the volume of domestic demand supported by public subsidies," said Valchishen.
According to the report, the average import price for natural gas in 2012 is estimated at $419 per 1,000 cubic meters, which is 28% up from the average price last year.
"The market pressure on the hryvnia exchange rate will be retained until the end of 2012. At the same time, interest rates on the market will remain high, as the government will defend the hryvnia exchange rate from pressure. Interest rates could fall after the IMF program is unblocked, which is expected to happen after the parliamentary elections in 2012," reads the statement.
ICU Group, which provides services on trading in securities, investment and banking services, as well as manages the assets of joint investment institutions, was established in 2006. It consists of an investment company and an asset management company.