Ukraine Country Risk Report Q3 2018
Following three years of severe recession from 2014-2016, Ukraine's economic recovery over the next two years will progress at a sluggish pace, as the separatist conflict and trade blockade in the Donbas, as well as lacklustre structural reform implementation, continues to weigh on the country's economic potential.
Ongoing cooperation with the IMF will ensure fiscal and debt sustain-ability over the short term, yet over the longer term, structural reforms and a more broad based macroeconomic recovery are needed to ensure financial stability.
Monetary conditions will continue to stabilise as the Ukrainian National Banks inflation targeting credibility improves and capital controls are gradually removed.
Future UAH depreciation will be a lot less severe, as previous de-valuations have brought the currency closer to fair value.
While political risks will remain elevated, we expect the government of President Petro Poroshenko to serve its full term until November 2019.
Executive Summary Core Views Major Forecast Changes Key Risks Chapter 1: Economic Outlook SWOT Analysis BMI Economic Risk Index Economic Growth Outlook Domestic Demand And Rebounding Exports To Support Growth GDP By Expenditure Outlook TABLE: PRIVATE CONSUMPTION FORECASTS TABLE: GOVERNMENT CONSUMPTION FORECASTS TABLE: FIXED INVESTMENT FORECASTS TABLE: NET EXPORTS FORECASTS TABLE: GDP GROWTH FORECASTS Outlook On External Position TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE TABLE: TOP 5 GOODS IMPORTS IN 2017 TABLE: TOP 5 GOODS EXPORTS IN 2017Monetary Policy NBU Remaining Hawkish Amid Elevated Inflation Monetary Policy Framework TABLE: MONETARY POLICYFiscal Policy And Public Debt Outlook Fiscal Stability Risks Rise As Debt Repayment Burden Increases Structural Fiscal Position TABLE: FISCAL POLICY Chapter 2: 10-Year Forecast The Ukrainian Economy To 2027 Long-Term Growth Outlook Remains Bleak TABLE: LONG-TERM MACROECONOMIC FORECASTS TABLE: 2018 WORLD BANK EASE OF DOING BUSINESS INDEX Chapter 3: Political Outlook SWOT Analysis BMI Political Risk Index Domestic Politics Rising Populism To Increase Political Uncertainty Ahead Of 2019 Elections Long-Term Political Outlook Eastern Separatism To Persist; Reforms To Face Bumpy Path Chapter 4: Operational Risk Operational Risk TABLE: OPERATIONAL RISK Business Crime TABLE: BUSINESS RESPONSE TO WHITE COLLAR AND ORGANISED CRIME RISK IN UKRAINE Education Chapter 5: BMI Global Macro Outlook Key Divergences Emerging In World Economy TABLE: GLOBAL MACROECONOMIC FORECASTS TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y TABLE: UKRAINE – MACROECONOMIC DATA & FORECASTS