1 Feb 2023 15:07

Ukraine's Economy Ministry confirms its forecast of 28% inflation in 2023

MOSCOW. Feb 1 (Interfax) - The Ukrainian Economy Ministry has confirmed its forecast that is at the core of the 2023 budget and projects GDP growth at 3.2% and inflation at 28%, First Deputy Economy Minister Denis Kudin said.

"The 28% [inflation forecast] remains unchanged. We are currently not inclined to review it. At the same time, we project real GDP growth at 3.2%, as we did earlier. We will stick to this forecast for now," Kudin said in an interview with Ukrainian journalists on the sidelines of the Rapid Recovery of Ukraine business forum in Luxembourg.

When commenting on the National Bank of Ukraine's decision last week to lower its inflation forecast from 20.8% to 18.7%, Kudin said that "all people who live in Ukraine want information to be reined in."

The cause of information today is mainly the growth of production costs, he said.

"In other words, supply chains have changed, the cost of logistics has increased, and it objectively affects production costs which producers put on the end consumers. We see no reason to review the macro-forecast we gave in October of last year. Individual figures have changed, but one thing balances another, and the general forecast remains the same," Kudin said.

Lower energy prices may have a significantly positive impact on inflation: the average yearly price of gas in the budget is projected at $1,300 per 1,000 cubic meters, whereas the Economy Ministry's current forecast is $900 per 1,000 cubic meters, he said.

"The second thing that we need to understand is how to move the exchange rate. If the NBU conducts a currency revaluation, and if a devaluation takes place, it will be quite difficult to avoid inflation," Kudin said.