Raiffeisen Bank expecting Ukrainian GDP to plummet at least a third in 2022

KYIV. April 26 (Interfax-Ukraine) - The Ukrainian economy will fall by approximately a third this year, according to the baseline scenario in which the current events continue for another 30 to 45 days, Raiffeisen Bank lead analyst (Kyiv) Oleksandr Pecherytsyn said at a Zoom conference on Tuesday.

Ukrainian GDP may fall up to 45% if the events continue until the end of this year, he said.

This is the first forecast made by the bank since February 24, Pecherytsyn said, noting that the drop was estimated at 15% at first and at 24% later.

The bank bases its forecast on a 39% decline in consumer consumption following the emigration of 15% of the population, lower incomes and negative expectations of consumers, he said.

Domestic investments, which are the most vulnerable element, will halve this year in the baseline scenario, Pecherytsyn said.

"Production relocation programs are a positive factor, which, however, is insignificant for the overall output," he said.

Speaking of inflation, Pecherytsyn said that the bank was still forecasting 17% in 2022, against 10% in 2021. The National Bank's purchase of UAH 60 billion military bonds keep this manageable for now, and government control over prices and a freeze on utility charges also have an effect, he said.

Pecherytsyn was the chief economist of Credit Agricole Bank (Kyiv) until February 2022.

The World Bank was expecting the Ukrainian economy to grow 3.2% in 2022 before February 24, but now it is expecting a 45.1% decline. According to the World Bank report of early April, the Ukrainian economy will grow only 2.1% in 2023, below the previous estimate of 3.5%.

The National Bank of Ukraine is forecasting GDP will fall at least a third this year, but has declined to give more specific estimates. The IMF is expecting a 35% drop.