Photo from UNIAN, by Volodymyr Hontar

The National Bank of Ukraine (NBU) has revised downward forecast for real gross domestic product (GDP) growth in 2021 from 4.2% to 3.8%.

Read alsoIMF publishes outlook for Ukraine economy until year-end"The Ukrainian economy is recovering, although slower than expected due to tightening of quarantine restrictions. Factoring in losses caused by the pandemic, the NBU revised downward its real GDP growth forecast for 2021, from 4.2% to 3.8%," the regulator's press service said on its website on April 15.

The economy almost reached its pre-crisis level in the fourth quarter (Q4) 2020, but its recovery slowed somewhat at the start of 2021.

"First, the introduction of new quarantine restrictions dampened business activity. Second, last year's smaller harvests affected the performance of agriculture, the food industry, and freight turnover. Third, increased competition in some global markets and greater trade restrictions imposed by Russia affected the industrial sector's performance, in spite of high prices on global commodity markets. Less favorable weather conditions in January-February weakened the performance of construction and transportation," the report said.

The Ukrainian economy will return to steady growth starting in Q2. Consumer demand will remain the main growth driver. The Ukrainian economy will grow at a pace of around 4% in 2022–2023.

"In 2021, the current account will record a slight deficit, which will widen noticeably in 2022 – 2023 on the back of rising domestic demand and less favorable terms of trade. In 2021, the current account will record a slight deficit, which will widen noticeably in 2022 – 2023 on the back of rising domestic demand and less favorable terms of trade," the press service said.

Background

  • Ukraine's GDP in January-February 2021 shrank by 2.8%, according to the Ministry for Development of Economy, Trade and Agriculture.
  • The World Bank expects a moderate recovery of the Ukrainian economy in 2021 with a 3.8% GDP growth.
  • The International Monetary Fund, after a 4% decline in Ukraine's GDP in 2020, projects its growth in 2021 by 4%, to be followed by a slowdown to 3.4% in 2022.