15:31 22.04.2019

Morgan Stanley predicts slowdown in Ukraine's GDP growth to 2.7% in 2019 with hryvnia weakening to UAH 30.5/$1

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Morgan Stanley predicts slowdown in Ukraine's GDP growth to 2.7% in 2019 with hryvnia weakening to UAH 30.5/$1

 Ukraine's GDP growth in 2019 will slow down from 3.3% last year to 2.7% this year and 2.6% next year with the hryvnia exchange rate weakening to UAH 30.5 per $1 by the end of 2019 and UAH 31.5/$1 by the end of 2020, Morgan Stanley bank predicts.

According to its survey, this is due to political and macroeconomic uncertainty, which affects investment, gas tariff increases and still high inflation, which suppresses household consumption.

The bank also points to external restrictions, including a slowdown in growth at Ukraine's major trading partners and stricter financial conditions.

According to Morgan Stanley, the speed of post-election reforms, including anti-corruption measures, also remains a key factor for the long-term perspective.

The bank expects that inflation in Ukraine will drop to 7% by the end of 2019 and 6.7% by the end of 2020, but will remain above the NBU target.

Morgan Stanley experts believe that in combination with tighter financial conditions, this will mean that real rates will remain high, while the refinancing rate will decrease only to 16% by the end of 2019 and 14% by the end of 2020.

"We expect the NBU to keep the key rate at 18% on April 25," the survey also says.

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