Country Report Ukraine September 2011
Market Research Report

Country Report Ukraine September 2011 Market Research Report

Outlook for 2011-15

• The president, Viktor Yanukovych, is expected to keep a firm grip on power in 2011-15, including through control of parliament and the government. There will be an erosion of some of the gains of the "Orange Revolution".
• Relations with Russia have improved in some respects under Mr Yanukovych, but tensions are likely, both related to gas agreements and in view of an expected deepening of Ukraine's economic links with the EU.
• The IMF programme will guide policy during the first half of the forecast period. The government will target a narrowing of the large budget deficit, although it may continue to drag its feet with regard to unpopular reforms.
• Real GDP growth is forecast to remain at 4.2% in 2011, the same rate as in 2010, supported by investment and export growth. In 2012 growth is forecast to dip to 4% owing to weaker export demand, before edging up in 2013-15.
• Inflation is forecast to average 9% in 2011, with pressure easing in the second half of the year owing to lower food prices. Inflation is forecast to moderate in 2012-15, assisted by only moderate growth in private consumption.
• The current-account deficit is expected to be contained over the forecast period, at 4% of GDP or lower, as domestic demand will be much more subdued than in the years preceding the economic crisis.

Monthly review

• On August 5th Yuliya Tymoshenko, the most prominent opposition leader, was arrested for contempt of court during her ongoing trial. The arrest could imperil a free-trade agreement between Ukraine and the EU.
• The pension reform bill, one of the conditions necessary for the resumption of disbursements from the IMF, passed through parliament in early July, but it has not yet been signed into law by the president.
• A continued failure by the Ukrainian government to meet the conditions agreed with the IMF under the current stand-by arrangement (SBA) has caused a new delay in unfreezing disbursements from the Fund.
• Ukraine is resisting further hikes in gas tariffs—another major reform demanded by the IMF—while it desperately tries to renegotiate lower prices for gas from Russia.
• Growth of agricultural output accelerated from 3.2% year on year in January-June, to 9.1% in January-July, as Ukraine enjoyed bumper harvests. Growth of industrial output in July slowed to 8.7% year on year, from 8.9% in June.
• Consumer prices declined in July and August, owing to lower food prices. In year-on-year terms, inflation dropped to 8.9% in August from 11.9% in June.

Source: Country Report

This report covers the following industry codes:
SIC Code: 1
NAICS Code: 11

• Highlights
  • Outlook for 2011-15: Political stability
  • Outlook for 2011-15: Election watch
  • Outlook for 2011-15: International relations
  • Outlook for 2011-15: Policy trends
  • Outlook for 2011-15: Fiscal policy
  • Outlook for 2011-15: Monetary policy
  • Outlook for 2011-15: International assumptions
  • Outlook for 2011-15: Economic growth
  • Outlook for 2011-15: Inflation
  • Outlook for 2011-15: Exchange rates
  • Outlook for 2011-15: External sector
  • Outlook for 2011-15: Forecast summary
  • The political scene: Yuliya Tymoshenko's arrest threatens passage of EU deal
  • The political scene: Pension reform law may be put to new vote in parliament
  • Economic policy: Resumption of IMF lending is postponed again
  • Economic policy: The government continues to resist hike in gas tariffs
  • Economic performance: Bumper harvests are buttressing growth
  • Economic performance: There is a modest slowdown in industrial output
  • Economic performance: Consumer prices decline month on month
  • Data and charts: Annual data and forecast
  • Data and charts: Quarterly data
  • Data and charts: Monthly data
  • Data and charts: Annual trends charts
  • Data and charts: Monthly trends charts
  • Data and charts: Comparative economic indicators
  • Basic data
  • Political structure