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Moody's expects Ukraine's GDP to grow 1.5% in 2014, hryvnia to fall to UAH 8.5/USD 1

30.12.2013

Ukraine's gross domestic product, after declining by 1% in 2013, will resume its slow growth, and rise by 1.5% in 2014, Moody's Investors Service has reported on the 30th of December 2013.

 

According to the service's estimates, which were released in the credit analysis of the Ukrainian government, such economic growth will be accompanied by a slight acceleration of inflation, from 0.8% in 2013 to 2.3% in 2014 (December to December), and a slight weakening of the hryvnia from UAH 8.3/USD 1 at the end of 2013 to UAH 8.5/USD 1 at the end of 2014.

 

Moody's suggested that in dollar terms Ukraine's nominal GDP next year would drop to USD 166.6 bln, compared with USD 171.8 bln in 2013, USD 176.3 bln in 2012 and a peak of USD 180 bln in 2008.

 

As reported, the Ukrainian economy in 2012 grew by only 0.2%, with deflation of 0.2%. According to the State Statistics Service, Ukraine's GDP in 2013 declined compared to 2012 by 1%.

 

It should be mentioned that IMF and Standard & Poor's have more moderate estimate to Ukrainian economy: in their view, Ukraine's GDP in 2014 would increase by 1% after the current recession by 0.3%-1%.

 

Analysts of the Fund and the Agency believe that the Russian loan of USD 15 bln will definitely help Ukraine in achieving its foreign economic goals. However, global financial institutions do not expect Ukraine to carry out significant broad-based reforms. In general, a little progress in areas such as fiscal consolidation, creating a more market-oriented domestic gas market, resolving non-performing loans in the financial sector and increasing exchange-rate flexibility is expected.

 

The Cabinet of Ministers of Ukraine is much more optimistic about the prospects for the country's economy: 2014 budget is based on a forecast of 3% GDP growth.