“In Ukraine, government stabilization efforts, supported by international financial institutions and a bumper agricultural crop, led to a sharp rebound in growth to 2.3 percent, following a cumulative 15.8 percent contraction in 2014-15 in the wake of geopolitical tensions with Russia,” the World Bank said in its report titled: “Global Economic Prospects June 2017: A Fragile Recovery,” published on June 3.
The Bank says that it also revised upwards the assessment of Ukrainian economic growth in 2016 to 2.3% from 1%, having maintained the forecast for the current year at 2%.
“In general, currencies in commodity exporters have strengthened and inflation has retreated as commodity prices have stabilized, allowing monetary policy to be eased in some countries (e.g., Brazil, Chile, Colombia, Ghana, Kazakhstan, Russia, Ukraine). Fiscal policy adjustment to low commodity prices is easing in countries where such adjustment started early and is well advanced (e.g., Honduras, Indonesia, Malaysia). Confidence is generally improving, although it remains fragile (e.g., Argentina, Brazil, Kazakhstan, Nigeria, Russia, Ukraine),” the report said.
“While private consumption growth appears to have bottomed out, impaired household balance sheets continue to weigh on consumption in some countries (e.g., Brazil, Kazakhstan, Russia, Ukraine),” it added.
The Bank also mentioned a cargo blockade on eastern region in Ukraine in March among geopolitical risks within the region.
As was reported with reference to the State Statistics Service of Ukraine, the growth of Ukraine’s GDP in the first quarter of 2017 slowed to 2.4% year-over-year, against 4.8% in the fourth quarter of 2016, which coincides with the World Bank’s projections.
Ukraine’s government drew up the 2017 national budget proceeding from a 3% increase in GDP amid 8.1% inflation, while the National Bank of Ukraine (NBU) expected a 2.8% rise in GDP amid 9.1% inflation.
The NBU later lowered its GDP growth forecast to 1.9% due to the Donbas blockade, while the government updated its economic growth forecast setting at 1.8% and revising its inflation forecast upwards to 11.2%.
Inflation in Ukraine in January-April 2017 was 4.9%. Inflation in April 2017 from April 2016 slowed to 12.2% against 15.1% in March 2017 from March 2016.
Ukraine’s government projects GDP growth will accelerate to 3% in 2018 and further to 3.6% in 2019 while inflation will slow to 7% and 5.9%, respectively.