Tough monetary policy and a strong currency helped Ukraine bring its annual inflation down to the central bank’s target of around 5% in 2019, the lowest rate of price rises in six years, a Reuters monthly poll of analysts forecast on Wednesday.
The survey suggested inflation had hit 4.8% in 2019 and is expected to stand at around 5.2% in 2020, close to the central bank’s mid-term goal of around 5%. Ukraine's State Statistics Service plans to publish its official data this week, Reuters reports.
Analysts at the brokerage ICU said inflation had slowed down thanks to a strengthened currency, low global oil and gas prices, and a bumper harvest.
The Ukrainian hryvnia strengthened 18% in 2019, backed by a $5 billion inflow of foreign investments in Ukrainian bonds and a more than 30% rise in grain exports.
Ukraine harvested a record 74 million tonnes of grain in 2019.
"In 2020, low energy prices, coupled with rigid fiscal policies and still-high interest rates, will continue to hold back consumer prices," they said in written comments.
The fast growth of consumer prices had been a key problem since the start of Russian aggression in 2014.
Ukrainian inflation jumped to 24.9% in 2014 and 43.3% in 2015 from 0.5% in 2013. The central bank gradually brought it down to single digits – 9.8% in 2018 – and has targeted 5% in 2020.
As UNIAN reported earlier, Ukraine's key lenders remain conservative in their forecasts. The International Monetary Fund predicts economic growth in 2020 at 3% with inflation of 5.6%, while the World Bank suggests GDP growth of 3.7% with inflation of 5.5%.
The forecasts of the Ukrainian authorities are almost identical. The National Bank expects economic growth at 3.5% with inflation at 5%. The 2020 state budget is based on the government forecast with a GDP growth of 3.7% with inflation of 5.5% and an average annual rate of UAH 27 to the dollar. However, the latter figure will be adjusted in the near future.
A consensus forecast by experts polled by UNIIAN says inflation at year-end will stand at 5.4%.