National Bank of Ukraine to review macro-economic forecast in July due to growing electricity shortage

MOSCOW. June 14 (Interfax) - The National Bank of Ukraine plans to review the macro-economic forecast in July amid the worsening situation in the energy sector, including the growing electricity shortage, Ukrainian media said, citing National Bank head Andrei Pyshny as telling a press briefing in Kiev on Thursday.

"For now, we keep to the baseline scenario and the forecast published in April. The reported electricity deficit remains relevant to a certain extent, in our view, although we see certain trends caused by complications. We are planning a review in a month, as we publish the macro-economic forecast in July," Pyshny said.

National Bank deputy head Sergei Nikolaichuk said, for his part, that the power grid situation was slightly better than expected by the regulator in April owing to electricity imports, warm weather and restricted power consumption by industries. However, the electricity deficit grew in May, and the situation remained complicated in June because of scheduled maintenance at nuclear power plants, he said.

"At the same time, we believe that the problem will be mitigated in the coming months by the broader authorization of the European Network of Transmission System Operators to transmit electricity on commercial terms," Nikolaichuk said.

In his words, electricity imports have no effect on the forex market. For his part, Pyshny said Ukraine paid from $20 million to $35 million for the imports.

"In short, we are expecting to pay around $800 million for electricity imports this year, according to our April forecast," Nikolaichuk said.

The electricity shortage and the use of alternate generation facilities may have a tangible effect on the inflation dynamics, including the price of services, while the effect is being levelled off by other factors for now, he said.

As reported on April 25, the National Bank downgraded this year's GDP growth forecast from 3.6% to 3%, versus the 5.3% growth of last year, because of the electricity deficit.

While approving the draft state budget before the second reading in early November 2023, the government forecasted a 4.6% economic growth this year. The Finance Ministry said lately that the forecast had been downgraded to 3.5%, while First Deputy Prime Minister, Economy Minister Yulia Sviridenko said in Berlin several days ago that the forecast had been downgraded below 4%.

According to the tentative estimates of the Economy Ministry, the GDP growth slowed down to 4.3% between April 2023 and April 2023 [±1%] from 4.6% [±1%] in March and decreased to 4.4% [±1%] over the first four months of the year from 4.5% [±1%] over the first three months.