The main reason - restrictions on certain activities
The National Bank of Ukraine (NBU) forecasts a 11% economic recession in Q2 2020 compared to the same period of the previous year, according to the inflation report on the NBU’s website.
The key recession factors include quarantine restrictions imposed on certain economic activities and a decline in agricultural production due to delayed harvesting.
The stimulus measures taken by the regulator and the government helped maintain business performance and private consumption flat.
“As the government started to ease the lockdown in May, both domestic and global economic activity started to gradually recover. The latter, in its turn, supported the growth in prices in global commodity markets. In addition, most domestic companies, that had been most affected during the crisis in the service sector, resumed full operation,” according to the report.
The NBU also notes that in the end of the second quarter, a considerable budget resource was accumulated to support the economy and fund debt repayments.
In turn, the Cabinet of Ministers of Ukraine expects a 14% drop in GDP in Q2, according to the Eurobond Prospectus issued by the Ministry of Finance of Ukraine. As a result, real GDP in Ukraine will fall by 4.8% in 2020.
As GMK Center reported earlier, the NBU lowered its forecast for Ukraine’s GDP in 2020 from the earlier expected 5% to 6%. The forecast for interest rate remained at 6%.
The forecast for economic growth in Ukraine in 2021 also fell from 4.3% to 4%, and expectations for 2022 remain the same so far, i.e. 4%.