Headline inflation is expected to decline to the upper bound of the target range, 5% ± 1 pp, in early 2020, and to reach the target level of 5% at the end of that year.
"The main factors behind further disinflation on the forecast horizon will be reasonably tight monetary conditions and strict fiscal policies, which will slow aggregate demand growth and bring back the negative output gap. The relatively low exchange rate volatility and a moderate rise in prices for imported goods, including energy and food, will be additional contributors. The inflationary impact of higher wages will weaken due to less intense labor migration and narrower wage gaps with neighboring countries than in previous years," the National Bank of Ukraine wrote in an Inflation Report for January 2019.
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The forecast for 2019 year-end inflation remains unchanged at 6.3%, while the projected dynamics of some of inflation components have been partially revised. The disinflation effects of lower global energy prices and a stronger hryvnia will be offset by the continued pressure on the part of wages and somewhat faster growth in administered prices.
As UNIAN reported earlier, the National Bank of Ukraine maintained its forecast for the growth of real GDP in Ukraine at 2.5% amid 6.3% inflation at the end of 2019.
The forecast for 2020 also remained unchanged: Ukraine's economy is expected to grow by 2.9% amid 5% inflation, according to the regulator's website.
The central bank also says Ukraine's GDP may grow by 3.7% in 2021 amid 5% inflation.
