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Experts downgrade forecast for Ukraine's GDP growth in 2011 to 4.6%, inflation to 10.7%
30 November 2010
The average forecast by experts for Ukraine's GDP growth in 2011 was downgraded in November 2010 to 4.6% from 4.8% in July 2010, according to a posting on the Economy Ministry's Web site.

According to the posting, the forecast was prepared by the ministry in November on the basis of updated estimations from experts at 19 state and non-governmental organizations.

The average forecast for inflation in 2011 was downgraded in November to 10.7%, from 10.0% in July 2010.

The report notes that the main risks in 2011 will be internal factors related to tariff and fiscal policies, as well as the development of the banking system.

"Risks from the public's growing negative inflation expectations grew. The experts said that the most significant external risk was moderate economic activity in the world as a result of the premature closure of programs to stimulate the economy and the worsening of crisis phenomena in the euro zone," the report says.

According to the economy ministry, during the discussion the experts also noted possible risks due to the Tax Code's coming into force.

"The experts are unanimous that there is a need to reduce the tax burden, but their views differed on what taxes have to be cut. They also focused on the need to further improve the Tax Code in terms of simplifying tax reporting," the report says.

The report notes that the average GDP growth improved in November compared to July by 0.4 percentage points, to 4.2%, while inflation remained at 12.2% (the maximum figure was 13.8%).

"High food inflation on the world markets remains a risk to the dynamics of domestic price growth," the report reads.

According to the updated forecast, the deficit of the account of current operations in 2010 could be $838 million and grow to $1.724 billion in 2011. The surplus of the account of operations with capital is expected at $4.927 billion in 2010 and $5.387 billion in 2011. Consequently, the hryvnia exchange rate is expected at UAH 7.97 per $1 by the end of 2010 and UAH 7.94 per $1 by the end of 2011.

According to average estimates, the international reserves of the National Bank of Ukraine will total $33.538 billion in 2010 and rise to $38.821 billion in 2011.

As reported, the government expects the GDP growth in 2011 at 4.5% with inflation at 8.9%.

Source: Interfax-Ukraine , Economy Ministry's Web site

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