Ukrainian bankers expect NBU to raise 2023 GDP growth forecast to up to 4%, cut inflation forecast to 7-8%
MOSCOW. Oct 26 (Interfax) - Bankers interviewed by Ukrainian media outlets expect the National Bank of Ukraine to improve its estimate of the country's real GDP growth in 2023 from 2.9% to 4% and revise its inflation forecast from 10.6% to 7-8%.
"The NBU forecast in July that inflation would decelerate to 10.6% at the end of the year. But already in September, the rate of consumer price growth dropped to 7.1% in annualized terms. It's completely obvious that the estimate in the September macro-forecast is much better. I expect to see a 7-8% range for inflation in the updated macro-forecast," UnexBank CEO Ivan Svitek said.
Svitek expects to see the NBU's more optimistic forecast for GDP growth as well.
"The regulator projected economic growth at 2.9% this year. Given the existing dynamics, the September estimates will be even more optimistic. I think that the forecast will be revised upwards to 3.3-3.7%," he said.
Former director of the Sense Bank analytical department Alexei Blinov also expects the forecast for real GDP growth to be improved: "it was +2.9% in July, now there should again be a conservative estimate of 4%, or a more optimistic one of 5%."
Blinov also expects the inflation forecast for the end of 2023 to be revised downward from July's 10.6% to 5.7-6.5%. There should also be a revision of "the clearly outdated" forecast for the grain and oilseeds harvest, as in summer the NBU projected this year's grain harvest in Ukraine at 46.8 million tonnes, but the country is now expecting the harvest of 54 million-57 million tonnes, he said.
"At the same time, I wouldn't improve the forecasts for 2024, except for automatic adjustments based on the revision of 2023 (from now on, it will probably be referred to as 'the highest basis of comparison'). Next year we will most likely see accelerating inflation and no more interest rate cuts," the analyst said.
Blinov's opinion is shared by director of the Pivdenny Bank's strategic analysis department Konstantin Khvedchuk.
"The NBU will improve the GDP growth forecast for this year to 4-5% in light of the better factual data. However, GDP growth potential will remain limited next year, where the main uncertainty is the intensity of the crisis. The effect of the factors (fiscal stimulus, good harvest) propping the economy this year will gradually become depleted, so next year we will obviously see a slowing down of the pace of economic recovery," Khvedchuk said.
As regards the normalization of the monetary policy design, the NBU will stick to a cautious approach and will avoid any serious changes for now, he said.
In conditions of excessive liquidity, banks have already started to actively cut deposit rates in the retail segment, a factor that will dent citizens' interest in deposit accounts and will boost demand for foreign currencies, Khvedchuk said.
Credit Dnepr Bank Deputy CEO Oksana Shveda also agrees with the positive forecast.
"On one hand, we are expecting a revision of the macro-forecast for the next period, including the inflation forecast. We predict a new level of 7-8% by the end of the year. At the same time, as we know, the inflation target for Ukraine is 5%," Shveda said.
This opinion was echoed by Raiffeisen Bank macroeconomic analysis senior manager Sergei Kolody.
"Given the improved price dynamics, the NBU will improve the inflation forecast for the following year probably to around 7%. We also expect the GDP forecast for 2023 to be raised to a 4-5% range. The inflation and economic growth forecasts for 2024 will remain practically unchanged," Kolody said.
As reported, the NBU in late July raised the GDP growth forecast for 2023 from 2% to 2.9%, as compared to its estimate of 0.3% in January, but cut the 2024 forecast from 4.3% to 3.5%.
In addition, the NBU once again revised the 2023 inflation forecast downward from 14.8% to 10.6% (18.7% in January) and cut the inflation forecast for 2024 from 9.6% to 8.5%.