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Macroeconomic overview by National bank of Ukraine
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10 June 2010
Having analyzed the dynamics of macroeconomic and monetary indicators in
January – May 2010, forecasted indicators of economic and social development of
Ukraine and the monetary market, the Board of the National Bank of Ukraine focuses
attention on some improvement in the macroeconomic situation.
According to the preliminary estimates GDP grew by 4.8% in the first quarter
of 2010 (in constant prices of 2007) in comparison with the first quarter of 2009. In
January-April 2010 the industrial output increased by 12.6% in comparison with the
respective period of the previous year. April saw a surplus in the consolidated BOP for
the second successive month with its cumulative volume amounting to USD
0.6 billion over 4 months.
Since February 2010, there has been an ongoing trend towards a reduction in
the inflation pressure which is manifested in a steady decrease in the consumer price
index calculated on both month-on-month and year-on-year terms. In May deflation of
consumer prices was observed for the second successive month. In May 2010 the
consumer price index made 103.7% versus December 2009 in comparison with
107.4% over the respective period of the previous year. In May 2010 the consumer
price index made 108.5% on the respective month of the previous year in comparison
with 114.7% in May and 112.3% in December 2009.
Despite the fact that the Cabinet of Ministers of Ukraine retained the official
forecasted consumer price index for 2010 at the level of 113.1% versus December
2009, (approved by the Decree of the Cabinet of Ministers of Ukraine # 281 of 24
March 2010) the CPI is expected to diminish to the level lower than 110% in 2011
(according to the draft of the Forecast for economic and social development of
Ukraine provided by the Ministry of Economy of Ukraine in the letter # 3001-25/182
of 31 May 2010). Such estimates of consumer inflation dynamics are in line with
current estimates provided by the experts of the international financial organizations
cooperating with Ukraine within the framework of respective programs.
The core inflation index is expected to be at the level lower than 110% in 2010
as well as in 2011.
An improvement in the macroeconomic situation as well as measures taken by
the National Bank of Ukraine in order to ensure stability of the monetary unit had a
positive impact on the situation in the monetary sphere.
In particular, from the second half of February 2010 an increase in the foreign
exchange supply was seen in the interbank market, which facilitated strengthening of
the hryvnia and enabled the National Bank of Ukraine to resume transactions on
purchase of foreign exchange. During January-May 2010 the hryvnia-to-US dollar
exchange rate strengthened by 0.9% to 7.9202 UAH per dollar.
The trend towards a recovery of banks’ funding base has persisted. Thus, in
January – May 2010 household deposits grew by 10.8% in the banking system,
whereas deposits of legal entities rose by 6.4%. The largest share of growth in
household deposits and the total growth in deposits of legal entities fell on deposits in
the national currency indicating increasing confidence in the hryvnia as well as
decreasing inflation and deflation expectations.
A steady recovery of banks’ funding base and sufficient level of liquidity
against a background of the reduction in the price pressure facilitated the decrease in
the value of funds in the national currency. As a result, the average weighted value of
loans in the national currency diminished from 19.6% in December 2009 to 14.6% in
May 2010, whereas the average weighted value of deposits in the national currency
reduced at a slower pace from 14.0% to 11.0% over this period.
At the same time the abovementioned positive developments still have not
resumed lending as the financial performance of enterprises (potential borrowers)
remains difficult after the crisis. What is more, the value of lending resources (even if
this downward trend continues) remains considerably high.
Source:
National bank of Ukraine
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