15 April 2021, Thursday, 18:20 278

NBU Downgrades Inflation Forecast For 2021 From 7% To 8% And GDP Growth Forecast From 4.2% To 3.8%

Редактор: Daria Zubkova

The National Bank of Ukraine (NBU) downgraded the inflation forecast for 2021 from 7% to 8% and the GDP growth forecast from 4.2% to 3.8%.

The NBU has said this in a statement, Ukrainian News Agency reports.

"Given the rapid recovery of the global economy and increased inflationary pressures, the National Bank of Ukraine revised its inflation forecast from 7% to 8% in 2021, but expects it to return to the 5% target in the first half of 2022 and further stabilize at this level," the statement reads.

The peak of the inflationary surge will occur in the third quarter of 2021.

In autumn, inflation will begin to decline and return to the target range of 5% ± 1 p.p. in the first half of 2022, where it will remain in the future.

"The economy of Ukraine is recovering, but slower than expected, in particular due to increased quarantine restrictions. Given the losses from the pandemic, the National Bank of Ukraine has downgraded the forecast for real GDP growth in 2021 from 4.2% to 3.8%," they noted at the NBU.

In the fourth quarter of last year, the economy almost reached pre-crisis levels, but at the beginning of 2021 its recovery slowed down somewhat.

Firstly, the introduction of new quarantine restrictions has led to the oppression of business activity.

Secondly, the effect of last year's low harvests affected the indicators of agriculture, food processing and cargo turnover.

Third, the increased competition in certain foreign markets and the expansion of trade restrictions on the part of Russia affected the performance of the industry, despite high prices in world commodity markets.

Difficult weather conditions in January-February weakened construction and transport performance.

At the same time, according to the results of March, despite the "quarantine of the red zones", the real sector of the economy is expected to grow due to the effect of a low comparison base and an actual improvement in the performance of enterprises.

Taking these factors into account, the economy is expected to contract on an annualized basis for the first quarter.

In 2022-2023, economic growth will be close to 4%.

As Ukrainian News Agency earlier reported, the National Bank notes that the main factors behind the fall in GDP in 2020 were quarantine restrictions and a decrease in domestic investment demand.

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