J.P. Morgan expects Ukraine's GDP to fall by 4% in 2020, grow by 6% in 2021
J.P. Morgan predicts an economic recession in Ukraine with GDP fall of 4% in 2020, with an average annual inflation of 2.6% (3.5% at the end of the year) and with a sharp rise in the current account surplus of the balance of payments to 5.7% of GDP, according to a review issued on September 14.
According to the document, next year the economy may grow by 6% with inflation of 4% and the renewal of the current account deficit at 1.5% of GDP.
Early July J.P. Morgan estimated the fall of the Ukrainian economy this year at 4.7% with a recovery next year by 6% and a current account surplus this year and next at 0.5% of GDP and 0.1% of GDP, respectively.
According to the recent forecast, the hryvnia exchange rate by the end of the fourth quarter of this year may be UAH 28/$1, by the end of the first quarter it could weaken to UAH 28.50/$1, by the end of the second – to UAH 29.50/$1 and by the end of the third – to UAH 30/$1.
The bank analysts said that Ukraine has fulfilled two benchmarks and almost completely other IMF requirements for the first review of the Stand-By Arrangement. However, a representative of the Fund said that at the moment its mission was not planned and pointed out the need to preserve the independence and integrity of the new anti-corruption bodies – National Anti-Corruption Bureau of Ukraine (NABU), Specialized Anti-Corruption Prosecutor's Office (SAPO) and the High Anti-Corruption Court (HACC). According to J.P. Morgan, the IMF is likely to postpone the second tranche of the program until the 2021 national budget is approved, and it will arrive roughly in December.