Consensus forecast for Ukraine in 2010: moderate growth is coming.

Members of the regular public consensus forecast improved forecast of economic growth in Ukraine in 2010 from 3,5% to 4%. However, the average expected fiscal deficit worsened immediately by 30 billion hryvnia - up to 85 billion hryvnia (7.4% of GDP). According to the median forecast of participants, in 2010 nominal GDP will exceed a trillion hryvnia.

The consensus forecast of economic growth was improved due to accelerating consumption (+0.4 percentage points compared with the forecast of December 2009) and investment (+0,6 percentage points). Among the sectors, the best expected dynamics is for the the industry (6.8%) and transport (6%). The most dynamic industries in 2010 promise to be mechanical engineering (11.3%) and steel (+10%).

The participants of the forecast improved their outlook for employment. Expected unemployment rate fell by 0.5 percentage points to 8,5% among people 15-70 years old (the methodology of the ILO). At the same time, the expected growth of real incomes of the population remains at that level of 2% (while some have predicted the fall of this index).

Analysts and research institutions, banks and other financial institutions have kept the average forecast exchange rate at 8.20 UAH / USD. (range of forecasts narrowed to 7,80-8,80).

Forecasts of inflation are sharply volatile. Average growth of CPI (December to December) was 13,3%, despite the fact that the maximum projection of one of the participants reached 20%. Prices of industrial producers will grow faster than the consumer, that is clearly associated with an acceleration in the industry.

Forecasting budgetary performance remains a matter of great difficulty for the participants because of lack of information about the actual state of the treasury. The outlook on the state of public finances has provided only half of participants.
In 2010, the deficit of public finances ranges from 4,4% to 9,8% of GDP. The main source of deficit is external borrowing. Participants of the consensus forecast also believe that the capitalization of banks may require from 10 to 25 billion hryvnia public funds this year.

The data for the current wave of the consensus forecast was provided by Astrum Investment Management, Concorde Capital, Dragon Capital, Erste Bank, FOREX Club, Gainsfort Research, OTP Bank, BTA Bank, Institute for Economic Research and Policy Consulting, International Bleyzer Fund, Ukrainian business magazine "Expert", investment group "Socrat", International Center for Policy Studies.

The results of the consensus forecast (average, minimum and maximum difference between the minimum and maximum values, the number of forecasts for each parameter), as well as assumptions that guided the participants in forecasting, attached to this release. Information about prognosis in the context of each participant is closed, since 6 out of 13 participants were asked not to disclose details of their forecasts.

Consensus forecast project is conducted by Expert business magazine.

If you want some additional info regarding macroeconomic or sectoral forecasts for Ukraine in 2010 please contact Igor Lutsenko (ilutsenko at gmail.com).

Business expectations turn to positive

Research by National bank of Ukraine indicated that expectations of top management of Ukrainian enterprises had shifted to modest positive zone in 4th quarter of 2009. In detail, 10% of business entities expect sales to rise in next 12 months, compared to 8% in 2nd and 3rd quarter of 2009. Also, the share of those who expect sales to go down narrowed to 24%.

For the year 2010, business sector expects inflation at the level of 15.1%. It is an optimistic estimate, considering rising gas prices and tariffs for heating etc. Also almost 60% expect devaluation of grivna in this year.

Experts outline that the balance of general expectations about the economic and financial state of companies in the next 12 months turned from a negative 2% in 3Q09 to positive 6.6% in 4Q09, becoming positive for the first time since the crisis entered its harsh stage in 4Q08.

The NBU has published its survey of business expectations in 4Q09. The survey is based on interviews with 1,245 companies across Ukraine, and provides a good representation of the Ukrainian business community.