Ukraine has predicted a GDP drop to 4.5%

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Moody’s expects that the economy will decline sharply this year.

International rating Agency Moody’s Investors Service forecasts a decline in gross domestic product of Ukraine in 2020 by 4.5% and the recovery of approximately 3.6% in 2021-m, while the Cabinet of Ministers forecast a decline to 8% this year, reports the Chronicle.info with reference to Country.

It is noted that Moody’s expects that the economy will decline sharply this year. This can happen because of the restrictions on domestic activities, weaker external demand and lower remittances

So, economic growth will gradually start recovering in the second half of 2020, with forecast real GDP growth of approximately 3.6% in 2021.

Thus, as expected to Moody’s, the budget deficit will increase to 7.5% of GDP in 2020 from 2.0% of GDP in 2019, resulting in higher requirements for government funding this year represent about 16% of GDP.

According to the Agency, investor sentiment towards Ukraine could be improved with a new International monetary Fund program, but still remain alert, given the increased risk aversion in global scale and the instability of domestic politics.

According to the forecast, the foreign exchange reserves of Ukraine with the new IMF program at year-end (excluding gold) will be approximately 22 billion dollars, sufficient to cover about four months of imports.

Recall, the IMF downgraded the forecast of Ukraine’s GDP decline in 2020 and predicted the reduction of foreign exchange reserves of the national Bank.