The decrease of the rate of growth of Ukrainian GDP (Gross Domestic Product) in year 2008 is forecast by Ukrainian experts. According to the World Bank calculations, GDP growth in Ukraine in the year 2008 shall come to 5.5 percent at best.
According to the prognosis of the World Bank, published on the November 1 the growth rate of Ukrainian GDP in the year 2007 will come to 6.7 percent. It will be noted that in the prognosis made in July, the growth rate of the GDP was up to six percent.
The revision of the prognosis made is related to the better external price and financing environment. It was mentioned in the World Bank report that national accounts data for the first half of 2007 showed that export prices were up by 23 percent and the terms of trade have improved by eight percent.
The consumer price growth prognosis for the year 2007 was also revised towards increasing from 9.7 percent to 12.5 percent. High rates of inflation are a result of a rise in prices of the main export products of Ukraine, a global rise in prices of the foodstuff, energy vector price growth, and, not to forget rates of capital inflow and the growth of housekeeping income. Concerning development projection for the year 2008, most of the experts agreed on the thought that growth rates of the GDP will decrease. World currency reserves forecast the growth of GDP on the 5.4 percent level.
The possible decrease of growth in comparison with the last year can happen due to decrease of growth in the industry and construction industries. The international rating agency Standard & Poor’s forecasts the deceleration of growth of the real GDP by 4.5 percent in its October’s analytical survey.
At the same time, in the judgment of the agency’s analysts, the main risks of the economics remain dependent on the metal market external price, liabilities in the power sector and paying off populations defaulted savings. Governmental forecasts concerning economic development are somewhat optimistic.
According to the information posted in October on the site of the Department of Economics of Ukraine, inflation forecasts for the year 2007 was at the point of 11.6 percent (8.6 percent in July). At the same time the prognosis of the GDP growth insignificantly improved to seven percent (6.9 percent in July). The inflation rate for the year 2008 shall be equal 7.2 percent, GDP growth - 6.8 percent.
World Bank economic adviser Martin Raiser informed that the prognosis for the year 2008 concerning the GDP growth up to 5.5 percent is feasible on conditions that Ukraine will carry into effect three recommendations. It is necessary to develop infrastructure inside the country. As for the legislative field, two laws must be passed: joint-stock company law and governmental purchase law. The third recommendation has to do with realistic budget development.
It is necessary to do things which shall really help to show the potency, i.e. increase in investment portfolio and decrease of consumer portfolio. In other words,the future is the aim of the investment process. “We now have a great opportunity to do things, the benefit of which you will be able to reap for many years. It is the adequate holding of the football championship that will help to show Ukraine on the world map. But if something goes wrong, Ukraine will have to pay for the mistakes made for a very long period of time,” Raiser said. The future Ukrainian government will hardly be able to fulfil the recommendations given by the international experts.
The 2008 budget is socially oriented, furthermore, the promise was given to return holdings of the USSR Savings bank to the Ukrainian citizens. Depending on the information of the numerous sources, the total sum of these holdings can be equal from 50 to 123 billions hryvnias, and all this under the conditions of 2007 Ukraine’s budget expenditure which is equal to 196 billion hryvnias. So it is more likely that the expert’s prognosis will come true.