Due to “coronaries” economy of Ukraine will fall by 5% – Advisor to the President

Вследствие "коронакризиса" экономика Украины упадет на 5% - советник Президента

Amid the global economic crisis associated with the pandemic coronavirus, the Ukrainian economy this year will fall by 5% instead of planned growth of 3.5%.

This forecast in the program “Right to rule” on channel 1+1 made the adviser of the President of Ukraine on economic issues, member of the Supervisory Council of the International Fund blazer Oleg Ustenko.

“In the baseline scenario, the economy will fall to 5%, compared with the 3.5 percent to which it had grown. We are faced with a situation where we have dramatically expanded the state budget deficit. The budget deficit this year will amount to about 10%,” – said Ustenko.

According to him, the main reason for the deterioration of the situation in the Ukrainian economy was the fall in world markets against the backdrop of a pandemic coronavirus: “We fall down due to the fact that there was a sharp deterioration of the conjuncture in the world markets, and we are still commodity-dependent countries, and more than half of our export is raw materials.”

The expert pointed out that Ukraine will be forced to increase external borrowing, because in the short term way to fix the situation there.

“Unfortunately, we have to do more debts. In the short term we have no choice, the country will need to borrow money. The question is – how, where and under what percent,” he said.

Also, according to adviser to the President, Ukraine will have to seek internal political compromise on the question of cuts in the expenditure budget.

“It is quite obvious that there must be progress in those public corporations that we have. There are obvious opportunities to reduce their costs, increase the amounts they could give to the state budget. At least in the short term this will Supplement our budget,” – said Ustenko.

In addition, in the medium term, according to him, the country would be forced to pursue a policy of monetary easing: “the first time We’ve faced such a problem. And for the first time we will have to pursue a policy of monetary easing, reducing the discount rate. And it will give the effect in the medium term”.

In the long run, according to Ustenko forecasts, income budgets will also be increased by putting in order in tax and customs spheres. However, a rapid effect can be expected here.

Talking about the positive prospects for Ukraine, the expert suggested that the country will be able to get a positive balance due to the sale of food resources in foreign markets

“Fortunately for us, the price drop is not catastrophic (in foreign markets – ed.). Most likely, progress will even be a plus to go on the food market. And this means that we will be able to win”, – said Ustenko.

But overall, he said, the global economy is not optimistic.

“Today’s speech by the managing Director of the IMF was not very encouraging. The world economy for the first time since the great depression will show a global decline. This fall may be around 5-10% just for this year”, – said the Advisor of the President.

Three months ago, in 2020, the expected positive growth of income per capita in more than 160 countries that are members of the Fund. “Today, the figure turned on its head: now we forecasted for this year, more than 170 countries have negative growth of income per capita,” said Georgieva.

Thus, according to her, the crisis will affect the economies of developing countries and countries with low income levels.