NBU might review Ukrainian 2023 GDP growth forecast up by over 1 pp
MOSCOW. March 30 (Interfax) - The economic situation in Ukraine in Q1 2023 is developing much better than the National Bank of Ukraine (NBU) predicted in its January forecast, especially as regards power supply, and therefore, the NBU is likely to improve the current forecast of 0.3% GDP growth this year, NBU Deputy Governor Sergei Nikolaichuk said.
"Even only due to the improvement of the situation in the power sector and considering changes in the presumption that we don't expect disruption in supplies before the end of this year, plus considering the Q1 results, this factor alone should ensure growth of one percentage point," Ukrainian media quoted Nikolaichuk as saying at a Business Breakfast.
He also mentioned an increase in the volume of international financial aid to cover state budget deficit to $42 billion from $38 billion, as well as plans to raise another $14 billion for recovery, which would help finance a bigger part of the deficit and provide a stronger fiscal impetus to the economy.
A decline in oil and gas prices should also improve trade conditions for Ukraine, Nikolaichuk said.
"These are the key changes that I see as compared to the January forecast. Therefore, it's highly likely that we'll review the economic growth forecast for this year up. But we have yet to assess specific figures, and we'll be able to announce them during a monetary press briefing on April 27," he said.
Power supply in Q1 was far better than the NBU's earlier expectations owing to the warm winter and efforts made by power engineers, he said.
"There has been virtually no power shortage since the second half of February, although back in January, we expected shortages even in Q2 and Q3. Electricity shortage in Q1 was 15%, while the inflation report was based on an estimated 27%," Nikolaichuk said.
Consumer and investment demand are also expected to recover more quickly, which is seen from high-frequency data of retail trade and services, such as a growing number of registrations of new individual entrepreneurs and other businesses, growing sales of cafes and restaurants, and average daily metal production.
Amid the hryvnia's strengthening on the cash market and the improvement of exchange rate expectations in the past few months, net foreign currency outflow, which amounted to billions of dollars in 2022, has now stopped, he said.
As reported earlier, the International Monetary Fund (IMF) expects Ukraine's real GDP growth in 2023 to range between -3% and +1%.