The International Monetary Fund expects the real GDP in Ukraine to contract by about 5 percent in 2014 amid weak investor and consumer confidence, however Ukraine's economic prospects will improve in the medium-term.
“Real GDP growth is expected to rebound to 2% percent in 2015, rising to 4 percent-4.5 percent in the medium term,” the Fund said in the statement posted on its Web site.
According to the IMF forecast, the inflation is expected to spike temporarily in response to the exchange rate depreciation and gas and heating tariff increases, reaching 16 percent at end-2014.
The current account deficit should fall to about 4.5 percent of GDP on the back of the exchange rate adjustment and subdued domestic demand.
At the same time, the gross international reserves will stabilize at around 2.5 months of import coverage replenished by international assistance.
The currency devaluation and official borrowing are expected to push public sector debt up to 57 percent of GDP and external debt to just below 100 percent of GDP.
The IMF expects the unemployment rate in Ukraine to gradually decline from 8.5 percent in 2014 to 7.5 percent by 2016.
“Buoyed by the restored competitiveness, exports are projected to grow by over 6 percent a year in 2015–2016. By end-2016, inflation will fall to about 6 percent and the NBU will build its international reserves to cover nearly 4 months of imports,” the fund said.
