The Ministry of Economy forecasts a 26% growth of Ukraine’s GDP in 2021–2023

Ministry clarified the national exchange rate

The Ministry for Development of Economy, Trade and Agriculture of Ukraine forecasts a 26.3% growth in the nominal gross domestic product in 2021–2023 — from ₴4,505.9 billion to ₴5,689.7 billion.

These figures are presented in the draft resolution of the Cabinet of Ministers of Ukraine on approval of the Forecast for Economic and Social Development of Ukraine for 2021–2023. The government is going to consider the document at its today’s meeting.

Key forecast macro indicators of economic and social development of Ukraine for 2021–2023

Indicator	2021	2022	2023
Nominal gross domestic product, ₴ billion	4505.9	5089.4	5689.7
GDP growth y-o-y, %	4.6	4.3	4.7
Average consumer price index y-o-y, %	8.1	6.7	6
Consumer price index in December y-o-y	7.3	6.2	5.3
Industrial producer price index in December y-o-y	8.7	8	6.1
Profit of profit-making companies, ₴ billion	911	1034.6	1171.9
Nominal average monthly salary, ₴ gross	13 632	15 414	17 169
Salaries for hired workers and financial support for military men, ₴ billion	1417	1612	1816.1
Number of people aged 15–70 engaged in economic activity, million people	16.36	16.66	16.84
Unemployment rate among people aged 15–70, % of workforce in the same age group	9.2	8.5	8
Labor productivity, % y-o-y	4.4	2.4	3.6
Trade balance, $ million	-10 416	-13 643	-16 996
Exports of goods and services, $ million	60 175	64 018	69 284
Exports of goods and services, % y-o-y	2.9	6.4	8.2
Imports of goods and services, $ million	70 591	77 661	86 280
Imports of goods and services, % y-o-y	10.6	10	11.1

Data source: Resolution of the Cabinet of Ministers

In the explanatory note to the draft Resolution, the Ministry of Economy expressed its concern about possible strengthening of UAH in 2021 to an extent more than expected.

That is why in the finalized document, the Ministry adjusted the exchange rate forecast for the national currency.

“In the framework of evaluation of fiscal risks for the budget, the Ministry of Economy used an integral econometric model to project the impact of a stronger UAH on forecast macro indicators. For the purpose of the evaluation, ₴27/$1 and ₴28/$1 were taken as the average exchange rate for 2021, with other assumptions constant,” according to the explanatory note.

The Ministry points out that strengthening of UAH in 2021 from the estimated ₴29.1/$1 to ₴28–27/$1 will cost Ukraine some 0.2–0.5% of GDP.

“With the average yearly rate of ₴28/$1, the real GDP growth will reduce by 0.2 pp. At the same time, imports of goods and services will increase in real terms by 0.24 pp, while exports of goods and services will reduce by 0.21 pp, and final expenditures of households by 0.02 pp”, the explanatory note reads further.

As GMK Center reported earlier, the Ministry of Economy estimated a decline in Ukraine’s GDP in January–May 2020 at 5.9% compared to the same period a year earlier. The decline in industrial production over the first five months was 8.7%.

Last week, the NBU lowered its forecast for Ukraine’s GDP in 2020 from the earlier expected 5% to 6%.