Ukraine's GDP to contract by at least a third, inflation to top 20% in 2022 - NBU

MOSCOW. June 21 (Interfax) - The National Bank of Ukraine (NBU) expects Ukraine's GDP to contract by least a third in 2022, NBU Deputy Governor Serhiy Nikolaychuk said when presenting a financial stability report.

"We expect GDP to shrink by at least one-third. We also expect inflation to accelerate and to top 20%," the Ukrainian media quoted Nikolaychuk as saying at a press briefing on Tuesday.

Nevertheless, these processes remain under control, he said.

In the opinion of Nikolaychuk, banks will lose at least 20% of their credit portfolio but over half of banks from the top 20 group will retain operating profit.

That will allow banks to rebuild capital on their own after the deep stage of the crisis is over, he said.

The National Bank of Ukraine is expecting the government to broaden state lending programs, Nikolaychuk said.

Nikolaychuk said earlier that the regions were helping the Ukrainian economy gradually bounce back from the point of its biggest decline in March; as a result, the pace of economic contraction in Ukraine in May 2022 (as compared to May 2021) slowed to 35%-40%.

As reported, the State Statistics Service of Ukraine has estimated that the country's GDP shrank by 15.1% in the first quarter of 2022 year-on-year, following a 6.1% growth in the fourth quarter of 2021.

The World Bank, for its part, expects Ukraine's economy to contract by 45.1% in 2022. The NBU has so far refrained from any precise projections, but believes that economic contraction will be of at least 30%. The International Monetary Fund, in turn, expects Ukraine's GDP to decrease by 35% in 2022.

According to State Statistics Service data, Ukraine's GDP grew 3.4% in 2021, following a 3.8% decline in 2020. Its nominal volume stood at around $200 billion in 2021.