15:08 29.07.2020

Govt approves macroeconomic forecast with 4.6% GDP growth in 2021

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Govt approves macroeconomic forecast with 4.6% GDP growth in 2021

The Cabinet of Ministers of Ukraine has approved the economic and social development forecast of Ukraine for the next three years, according to which growth of GDP in 2021 will be 4.6% with inflation of 7.3% and in 2022, GDP would grow by 4.3% with inflation of 6.2%.

An Interfax-Ukraine correspondent has reported that the decision was made at the Wednesday government meeting. The document is subject to minor review within three days.

According to the draft resolution, nominal GDP next year is expected to reach UAH 4.505 trillion with further growth to UAH 5.089 trillion in 2022.

The deficit of Ukraine's balance of trade will amount to $10.4 billion in 2021 and $13.6 billion in 2022.

The revised macroeconomic forecast provides for an increase in the minimum wage in 2021 to UAH 6,250 (in two stages - to UAH 6,000 from the beginning of 2021 and to UAH 6,500 from July 1), and in 2022 – to UAH 6,700 and to UAH 7,176 in 2023.

According to the expectations of the ministry, the nominal average monthly salary next year will be UAH 13,632 and UAH 15,414 in 2022. At the same time, unemployment will be 9.2% of the working population next year and 8.5% in a year.

He National Bank of Ukraine (NBU) expressed concern about the possible stronger hryvnia in 2021 than it was predicted. Thus, in the revised macroeconomic forecast, the forecast indicators of the hryvnia exchange rate were reviewed to UAH 29.10/$1 (from UAH 29.70/$1) on average per year and to UAH 28.80/$1 (from UAH 29.30/$1) – by the end of 2021.

When assessing fiscal risks for the budget, the Ministry for Development of Economy, Trade and Agriculture, based on an integral econometric model, made a simulation of the effect of a stronger hryvnia on predicted macroeconomic indicators. With an average annual exchange rate of UAH 27/$1, the growth of real GDP compared to the baseline scenario in 2021 will decrease 0.5 percentage points (pp), with the rate of UAH 28/$1 – it will fall by 0.2 percentage points.

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