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The main driving forces of economic growth in Ukraine in 2017 will be an increase in consumption and investment in fixed assets, Segodnya newspaper wrote with reference to the forecast by ICU Group.
Experts estimate GDP growth over 2016 at 1.5-1.6% and forecast economic growth of 2.3% in 2017.
"In 2018, GDP growth will accelerate to 3%, and from 2019, the economy will reach the average annual growth rate of 4%," says Head of the research department at ICU Group Oleksandr Valchyshen.
According to the expert, the main driver of the economy in 2017 will be the growth of domestic demand, which will be provided by maintaining the share of public expenditures at the level of 30% in relation to GDP and the growth of investment in fixed assets.
Read alsoBudget 2017: defense, wages, and roads"The increase in government spending through the budget is a key element of support for domestic demand in the economy. Export-oriented sector in the current environment can not yet be an accelerator of economic recovery, therefore the government is taking measures to increase domestic demand, including consumption, which today accounts for 68% of GDP, "said Valchyshen. "Domestic demand will be provided by the domestic supply of goods or services. In addition, we should expect recovery in consumer capability of households. This is good news for the construction business, engineering industry and their adjacent segments."
Valchyshen is positive that the budgeted increase in the minimum wage in 2017 will contribute to the restoration of the purchasing power of households.
"We estimate the increase in the minimum wage in 2017 as a positive step which the government takes in an attempt to reverse the trend of the last two years, when the share of wages in GDP income dropped to its historic lows (38.3% in Q3 2016)," said Valchyshen. "At the same time, the share of profit of economic entities of all forms of ownership is at its peak (45%). Before the economic crisis of 2014-2015, this proportion was 54%/36%, respectively. That is, in 2014-2015, there was a double shrinking – the reduction of the volume of nominal GDP, and at the same time the decrease in the share of wages."