NBU: Coronavirus to have short-term effect on global economy

The National Bank of Ukraine (NBU) says Chinese coronavirus will have a short-term effect on world markets and the global economy, which will weakly affect the Ukrainian economy and the attractiveness of developing countries' assets for foreign investors.

"Given the previous experience and the pace of measures taken by the Chinese authorities, the outbreak is expected to have a short-term effect both on world markets and the global economy. This will have a weak effect on the Ukrainian economy and the attractiveness of developing economies' assets, including Ukrainian ones, to foreign investors," reads the NBU's January 2020 Inflation Report.

The regulator says the rapid spread of coronavirus in China and the unprecedented security measures undertaken to isolate entire cities with a multimillion population led to an increase in panic in global commodity and financial markets.

At the same time, there is a risk of a longer impact on the world economy and tangible consequences for the Ukrainian economy, primarily due to the deterioration of the situation on world financial markets in the year of peak payments on external obligations.

Read alsoCoronavirus could eat into 1% of China's quarterly GDP: Moody's Analytics

As UNIAN reported earlier, the National Bank of Ukraine maintained the forecast for real GDP growth in Ukraine in 2020 by 3.5%. The forecast at 4% for 2021 also remains unchanged. The regulator expects a 4% economic growth in 2022.

The growth of Ukraine's real GDP in the third quarter of 2019 was 4.1% year-over-year. The expected growth rate for 2019 as a whole at about 3.5% would be the highest one over the past eight years.

According to recent forecasts, the International Monetary Fund expects economic growth in Ukraine in 2020 by 3%, the World Bank's forecast is set at 3.7%. The Ukrainian government predicts an increase in Ukraine's real GDP this year by 3.7%, but says it will review its projections.