12:24 23.03.2020

Dragon Capital head predicts 4-9% fall in Ukraine's GDP

2 min read
Dragon Capital head predicts 4-9% fall in Ukraine's GDP

Ukraine's GDP will decline by 4% if quarantine lasts up to three months and by 9% if it lasts longer, Head of Dragon Capital investment company Tomas Fiala has said.

"If quarantine in the main countries, in the EU, the United States and Ukraine, lasts for no more than three months and not until the second half of the year, if the number of infected people declines before the end of May and the economy can work from the third quarter, then the reduction in global GDP will be 1-2%. This is more than it was in 2009. In Ukraine, GDP will decline by 4%," Fiala said on the Freedom of Speech TV program on March 20.

This scenario involves the devaluation of the hryvnia to UAH 30/$1 with inflation being 5%, as well as a sufficiently large increase in unemployment and a drop in budget revenues, he added.

"If quarantine extended until June-July and it cannot be stopped or relaxed, we expect the [Ukrainian] economy will fall by 9%. The exchange rate will be UAH 35/$1, inflation will increase," Fiala said.

The government, first of all, should meet the conditions of cooperation with the International Monetary Fund (IMF), he said.

"This means the adoption of two bills. We hope that at the beginning of next week the parliament will meet and these two bills will be voted," the head of Dragon Capital said.

The two main preliminary measures for concluding a new program with the IMF are the adoption of a law on the land market and amendments to the law on banks, which makes it impossible to harm public finances by the former owners of the banks, which the National Bank once removed from the market.

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