News
05.03.2010
S&P predicts Ukraine’s GDP to increase by 3.5% in 2010
The international rating agency Standard & Poor's (S&P) predicts Ukraine’s economy will grow in 2010-2011 by 3.5% and 4%, respectively. According to S&P, “The banks of Kazakhstan, Russia, and Ukraine will follow a strategy of cautious growth to withstand the recession,” S&P Ukrainian inflation will be at 13% this year and will decrease to 9% next year.
“We expect a slower recovery of Ukraine’s economy in 2010 due to significant damage to the banking sector and the high unemployment rate among the three countries, which restrains consumer spending,” note S&P experts. They predict that Russia’s and Kazakhstan’s economies will grow by 4.5% and 3.8%, respectively.
According to S&P forecasts, loans to the private sector and state-owned non-financial organizations will fall from last year’s 94.9% of gross domestic product (GDP) to 86.8% of GDP this year and 80.4% of GDP next year. Simultaneously, financial organizations will be able to decrease their contingent liabilities from 47.5% of GDP in 2009 to 43.4% of GDP in 2010 and 40.2% of GDP in 2011, agency experts believe. They reminded readers that aggregate assets of the Ukrainian banking sector shrank by 4% in 2009 and loans by 12%.
“The figures might have been worse if a significant volume of defaulting loans had not been prolonged. We expect lending to increase by 6-8% in 2010-2011, first of all owing to banks with foreign participation,” reads the report.
S&P points out that the arrival of foreign investors in 2005-2008, who currently control over 40% of Ukraine’s banking sector, somewhat mitigated the financial crisis in Ukraine.
As reported before, the government of Ukraine expects the GDP to grow by 3.7% in 2010 with the country’s inflation rate at 9.7%, while forecasts of the Yushchenko Presidential Secretariat are somewhat more pessimistic: 3% and 12.5%, respectively. According to Economy Ministry estimates, Ukraine’s GDP fell by 15% in 2009 with inflation at 12.3%.
