economy forecast

The second report which forecasts the economy of Ukraine is by the International Centre for Policy Studies (ICPS). This report states that Ukraine’s economy will grow significantly in 2007 and then slow down to a moderate pace in 2008.This expects real GDP to grow 85 in 2007, 6% in 2008 and 6% in 2009. They suggest that an increase in GDP in 2007 is due to strong investments and recovery of exports. It is also believed that the major force behind this growth would be private consumption which would increase due to increase in real salary. They predict that in 2008, it will be the investments which bring about GDP growth. Gross Accumulation of Fixed Assets (GAFA) will grow 22%, 14% and 10% in 2007, 2008 and 2009. Contribution of Foreign Trade to GDP will be negative, as the growth of exports will be lower than imports. Trade deficits will therefore increase. Trade deficit will be 4.6% of GDP in 2007, 6.9% and 8.9% in 2008 and 2009 respectively. Exports of goods will show an increase of 16%, 12% and 10% in 2007, 2008 and 2009 respectively. Imports of goods over the same periods will grow 20%, 18% and 16%. Inflation though low in the start of 2007 will show an increase over the years. By the end of 2007 CPI will have grown 9%. Consumer prices will grow 8% in 2008 and 6% in 2009.

As stated earlier these economic predictions could change due to a number of factors like a full blown political crisis at the end of 2008 when elections to the RADA are due, world price fluctuation of steel and chemical products, devaluation of USD and postponement of Ukraine joining the WTO.

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