World Bank expects Ukrainian economy to grow by 3% in 2021

The World Bank expects global economy to grow by 4% in 2021, and the Ukrainian one – by 3%, provided that massive vaccination against COVID-19 continues throughout this year.

That's according to the Bank's statement referring the January review "Global Economic Prospects".

The World Bank notes that the recovery is likely to be weak if policymakers avoid decisive action to curb the pandemic and implement reform that boost investment.

"Despite the fact that the Ukrainian economy is expected to grow in 2021 after contracting 5.5% in 2020, the pandemic has caused significant economic damage to the population of Ukraine. Considering the high level of uncertainty associated with the long-term implications of the pandemic and the vaccine development, all economic entities in both the public and private sectors, as well as households, will have to accept challenging economic conditions both at home and abroad," the statement says.

It is reported that in 2021, the World Bank expects a moderate recovery of the Ukrainian economy, with GDP growth predicted at only 3%. In this period of gradual recovery, it is especially important to redouble efforts to eliminate the existing structural deficiencies in the Ukrainian economy, the organization believes.

"As before, the budget situation will be seriously complicated by the pandemic and the need to ensure protection to the most vulnerable strata of the population. The widening budget deficit, significant public debt servicing obligations, and high levels of uncertainty will hold back private investment that are needed so much," the press service said.

Read alsoYear's balance: Ukraine's economy weathers a corona blow, looking to the future with hopeIt is also noted that it will be especially important for Ukraine to facilitate the flow of capital and labor to the most productive sectors of the economy by strengthening the rule of law, speeding up the process of resolving problem loans, reducing regulatory barriers, and strengthening management of state-owned banks.

"As Ukraine continues to recover in 2021, one of the key lessons of this global crisis is the importance of strengthening macroeconomic resilience. A balanced monetary and fiscal policy of Ukraine, including the absence of significant external and internal imbalances, helped mitigate the most serious consequences of the pandemic for the Ukrainian economy," it was reported.

Maintaining the regulatory independence of the National Bank of Ukraine will remain to be critical to maintaining trust and sustainability, the World Bank believes.

Background

The World Bank's Board of Executive Directors has approved a loan to Ukraine in the amount of US$300 million for the Second Additional Financing for COVID-19 Response under the Social Safety Nets Modernization Project.