REUTERS
As for inflation, Razumkov Center predicts that in 2019 it will be at 10.7%, in in 2020 it will amount to 8.3%, and to 7.4% in 2021.
GDP growth in Ukraine in 2019 will be at 0.5%, while in 2020 and 2021 the pace will be 1% and 2.9%, respectively, as stated in the forecast of the country's economic development titled "Limited Pessimism," released by Razumkov Center.
"It is the special challenges facing the country in 2019, primarily as a result of the next presidential and parliamentary elections, that will provoke high politicization of economic decisions (including due to populism of many parties), and this will adversely affect economic development," the forecast said.
Also, the election campaigns, according to the center, will increase the state of uncertainty among the businesses, which will be extremely careful to make decisions regarding their further strategic steps.
As stated in the forecast, the electoral marathon throughout almost the entire year of 2019 will slow down any intentions to introduce economic transformations, limiting opportunities to stimulate economic activity.
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"At the same time, the government is likely to even increase its interference in business operations, including through fiscal services, to fill budgets and fulfill social promises, which will also affect the businesses’ ability to grow and accelerate. Therefore, avoiding an economic collapse in 2019 will already be viewed as a positive result,” the forecast says.
As for inflation, Razumkov Center predicts that in 2019 it will be at 10.7%, in 2020 it will amount to 8.3%, and to 7.4% in 2021.
The dollar in 2019 is projected at UAH 30.5 hryvnia per USD 1, UAH 32/USD in 2020, and UAH33.3/USD in 2021.
Given the slower pace of global economic growth and the strengthening of protectionist measures, Razumkov Center sees the prospects for Ukraine's foreign trade expansion in the next two years as not too optimistic.
"The situation is exacerbated by the fact that starting 2019, Ukraine will lose significant financial resources due to a significant reduction in gas transit, which will seriously affect the export of services. In general, the current account will remain scarce, while foreign direct investment will not be sufficient to cover [it]," the forecast reads.
As for the exports of Ukrainian goods and services, the Center believes in 2019 its growth will remain under 6%. Only in 2021 will export growth be at 12% as it will begin to outpace the growth of imports.
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Razumkov Center expects no improvement in 2019 of the situation with foreign direct investment.
“Just as in 2018, the inflow of foreign direct investment will not exceed $3 billion. Only in the second half of 2020, when the new structure of authorities becomes clear and new institutions are formed, will foreign investors consider investing in Ukraine more boldly. However, the inflow will remain at $4 billion,” the forecast says.
As UNIAN reported earlier, on September 14, the Cabinet of Ministers approved and submitted for consideration by the Verkhovna Rada a 2019 draft state budget, based on a macroeconomic forecast with real GDP growth at 3% and inflation set at 7.4%. The International Monetary Fund has worsened the forecast for Ukrainian economic growth in 2019 from 3.3% to 2.7%. The European Bank for Reconstruction and Development in 2019 predicts Ukrainian GDP growth by 3%, and the World Bank – at 3.5%.