The National Bank revised for better forecasts for inflation, GDP and international reserves of Ukraine.
The National Bank of Ukraine decided to keep the discount rate at 25% per year, which has been held since June of last year. This was reported on the regulator’s website on Thursday, April 27.
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“It will support the effects of previous measures to increase the attractiveness of hryvnia assets, continue to ensure the stability of the foreign exchange market and create the right requirements for maintaining a stable trend towards more low inflation and easing of the heaviest foreign exchange restrictions,” the report said.
The NBU states that inflation is decreasing rapidly, but due to the impact of the war, price pressure remains high. In particular, the pace of price growth fell faster than the regulator’s forecasts, and in March inflation slowed to 21.3% year-on-year.
The easing of inflationary pressures was facilitated by the adequate supply of food and fuel, as well as the rapid recovery of the energy system from the consequences of Russian attacks. In addition, against the backdrop of the cessation of hryvnia printing, the strengthening of the cash rate and the increase in the attractiveness of hryvnia assets, inflationary expectations have improved.
On the other hand, the drop in inflation was mainly due to the high base of comparison last year, and was also boosted by the warm winter weather. As a result, pressure remains on business production costs, especially due to the difficulty of working and setting up logistics in a war environment.
The National Bank revised its inflation forecast for 2023 from 18.7% to 14.8%. According to the updated forecast, this year inflation will decrease to 14.8%, and in the following years it will return to a single-digit level: in 2024 to 9.6%, and in 2025 to 6%.
The NBU also predicts Ukraine’s gross domestic product (GDP) growth in 2023 by 2.0%, although in January growth was estimated at 0.3%.
According to the updated forecast, the economy will grow by 4.3% in 2024 (previously forecast to grow by 4.1%). In 2025, GDP growth will be 6.4% (previous forecast was 6.4%).
In addition, the NBU predicts the size of Ukraine’s international reserves at the end of 2023 at $34.5 billion. This is significantly higher than the January forecast of $27 billion.
According to the updated forecast, reserves will increase to $36.1 billion by 2024 (previously expected to be $31.0 billion). By 2025, reserves will reach $37.1 billion (previous forecast was $34.6 billion).
Source: korrespondent
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