The Ukrainian economy has continued to pull out of sharp recession and the outlook has been bolstered by the prospect of renewed cooperation with the International Monetary Fund (IMF), the European Bank for Reconstruction and Development (EBRD) said.
In its latest Regional Economic Prospects report, the EBRD said the approval and implementation of a new Stand-By Arrangement with the IMF would help to address Ukraine's near-term external financing needs and maintain macroeconomic stability during the electoral cycle in 2019, EBRD said on its website.
The Bank is forecasting Ukrainian growth of 3.5% in 2018 and 3.0% in 2019, compared with 2.5% in 2017.
It said large foreign exchange public debt liabilities falling due in 2018-19 posed downside risks to the outlook.
The report said fast-growing real wages and remittances had stimulated household consumption, while domestic investment in fixed assets had continued to grow apace in the first two quarters of 2018, albeit at a slower rate compared to the same period of the previous year.
Headline inflation remained elevated at 11.4% year-on-year in the first nine months of 2018, well above the medium-term inflation target of 5% plus-minus one percentage point, although the rate of inflation slid into high single digits between June and September.
The report noted that the National Bank of Ukraine had moved to counter inflationary pressures by raising its key policy rate four consecutive times from 14.5% in January 2017 to 18% in September 2018.
Exchange rate volatility had remained under control in the year to date, despite seasonal variations, it added.