Forecast losses. What will be the economic losses of Ukraine because of the pandemic coronavirus

Прогноз убытков. Какими будут экономические потери Украины из-за пандемии коронавируса

The world has entered a crisis caused by coronavirus. The world economy, and with it the economy of Ukraine are suffering from the pandemic and quarantine, freezing as a consequence of international economic relations, as well as from the critical drop in business activity.

Ukraine – a country dependent on commodity exports, and shocks to foreign markets. It is characterized by low productivity and high cost of credit for businesses and individuals. Small and medium business is in an uncompetitive environment compared to large companies (FPG), and the majority of citizens do not have the financial safety net and live from paycheck to paycheck.

Experts of the Ukrainian Institute of the future (UIF) made preliminary estimates of the losses of the Ukrainian economy and citizens from the crisis and quarantine, namely:

– expected decline in formal employment. We are not talking necessarily about the reduction of working places. Perhaps the employee will receive unpaid leave, but he will lose income. Informal employment and “workers” who have returned to Ukraine, the calculations were not taken into account;

– change in real GDP of Ukraine;

losses of Ukrainian economy from the 1st day of quarantine. The loss was calculated as the difference between GDP, which could be created without the crisis and quarantine (forecast NBU according to the inflation report for January 2020), and the expected GDP compared to quarantine (forecast UIF), proceeding from duration of 60 days (scenario No. 2 – in each quarter).

Calculations were made according to two scenarios depending on the duration of the quarantine.

Scenario # 1 (basic)

Quarantine – April-may.

Assumptions of experts UIF on which to build estimates.

1. The world economy according to the results 2020Е reduced. Drop is 1-1,5% year-on-year – the assessment of Goldman Sachs and McKinsey (negative scenario).

2. The peak incidence in Ukraine is at the end of April – beginning of may 2020.

3. The quarantine shall be prolonged until the end of may (in may – more free mode).

4. The period of quarantine – a month (for example China).

5. The sowing takes place in accordance with the plan, just in time.

6. A state of emergency in Ukraine is not entered.

7. The expected decline in employment by industry shown in table. 1.