World Bank forecasts growth of Ukrainian economy in 2016

World Bank forecasts growth of Ukrainian economy in 2016
World Bank forecasts growth of Ukrainian economy in 2016

This article discusses #forecast of the #World Bank in relation to the #economic development of #Ukraine in #2016.

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The World Bank confirmed its previous forecast of growth of the Ukrainian economy by 1% in 2016. However, this forecast is applicable only if Ukraine continues to implement all previously announced reforms. We note that the Government of Ukraine earlier stated that Ukrainian GDP will grow by more than 2% in 2016, while the Ministry of the Economic Development and Trade of Ukraine published its report predicting 2.9% of growth in 2016. At the same time, under estimation of the World Bank, growth of 2% might be only possible in 2017.

The World Bank also forecasts inflation rate in Ukraine to be 15% in 2016, 11% in 2017 and 9% in 2018. Ukrainian export is predicted to rise by 2.2% in 2016, 5% in 2017 and 4% in 2018. The amount of import will also gradually increase by 0.6% in 2016, 2.3% in 2017 and 4.6% in 2018.

According to the report of the Cabinet of Ministers of Ukraine, in 2015 Ukraine’s GDP declined by 10.4% compared to 2014. The high proportion of the GDP decline is connected to the armed conflict in Donetsk and Luhansk regions. It was calculated that this conflict contributed more than 40% to the negative GDP dynamic. It is emphasized that without taking into consideration of the impact of in Donetsk and Luhansk regions, the decline in GDP in 2015 could have amounted to 5.9%, including in industry – 5.2% (actual decline is 13.4%), agriculture – 2.9% (actual decline is 4.8%), construction – 9.1% (actual decline is 14.9%).

We note that earlier the State Statistics Service of Ukraine announced that Ukraine’s trade balance was positive and amounted to USD 632 million in 2015 (in 2014 Ukraine ended up with negative trade balance in amount of USD 527 million). The last time Ukraine ended up the year with positive trade balance six years ago. In addition, foreign investors invested USD 3.763 billion to the economy of Ukraine in 2015. At the same time, outflow of direct foreign investment (share capital) from Ukraine amounted to USD 891.3 million.

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