While the GDP growth in 2017 was stated a 2%, Fitch forecasts that in 2017 and 2018 the growth will accelerate to 3.2% and 3.7% respectively. The previous forecast stated the 3% acceleration for 2018.
“Growth will likely remain weaker than 'B' rated peers, despite a forecast recovery. Fitch forecast growth at 2% for 2017 and expects Ukraine to accelerate to 3.2% and 3.7% in 2018 and 2019, respectively, driven by domestic demand. Private consumption benefits from improvement in real incomes and increased access to credit. Investment (21.4% of GDP) is experiencing a cyclical recovery, but it will remain below 'B' peers (24%),” the agency stated.
The agency also forecasts Ukraine to receive the fourth tranche from the International Monetary Fund, expecting the government to put in place legislation on privatization and the fight against corruption. Moreover, an agreement on household heating tariffs in Ukraine must be reached, and the 2018 budget approved.
As to the inflation, the agency forecasts its reduction.
“Inflation will average 12.9% and finish 2017 above the National Bank of Ukraine's (NBU) target band of 8%-2% due to supply shocks (food prices). However, it is likely to decline gradually over the forecast period and average 7.8% in 2019, still above the 5% 'B' median”.
Fitch has also affirmed Ukraine's Long-Term Foreign-Currency Issuer Default Rating at 'B-' with a Stable Outlook.