Ukraine better world worse. The IMF forecast for 2020

Украине лучше, миру хуже. Прогноз МВФ на 2020 год

The IMF improved the Outlook for Ukraine and the world worsened

The world economy will fall to the performance since the global crisis of 2008-2009. The Ukrainian GDP and local currency predict the growth.

The international monetary Fund has lowered its growth forecast for the world economy until at least ten years. Synchronous slowdown for most economies in the world due to the escalation of geopolitical tensions and trade war.

In the case of Ukraine’s economy, the IMF has improved the forecast of growth. Fund analysts also revised its forecast for the hryvnia exchange rate at five years in a positive direction. Корреспондент.net tells details.


How and why crashes the world economy

The view of the organization presented in the October issue of the report prospects of the world economy: global recession, rising trade barriers, which was published on 15 October.

In a new forecast, the IMF reflected all the concerns of the new managing Director of the Fund Kristallina Georgieva.

In his recent speech, she predicted the global economy to the lowest level of growth since the beginning of the decade and the threat of default on corporate debt amounting to $ 19 trillion.

According to the IMF survey, in 2019 is expected three-percent growth of the world economy. This is the lowest since 2008-2009.

“In large emerging markets, particularly in Brazil, Mexico, Russia and Saudi Arabia, the growth rate in 2019, projected to be approximately one percent or less, significantly below the average for previous periods,” – said in the document.

Overall, the forecast economic growth in 2019 in emerging markets and developing countries decreased to 3.9 percent compared with 4.5 percent last year. In advanced economies the growth is expected to average 1.7 per cent against 2.3 per cent in 2018.

One of the major reasons for the slowdown, the IMF calls the slowdown in the manufacturing and global trade, increase in volumes which during the first half of 2019 amounted to one percent – the lowest level since 2012.

This is due to several factors. Increase rates and continued uncertainty related to trade policy have led to weakening investment and demand for investment goods.

The reduction in the automotive industry is also associated with specific shocks (such as failures due to the introduction of new emission standards in the Euro area and China) that have long-term consequences.

The trade war. China’s economy fell to 1992

Next year’s forecast economic growth Fund is also restrained at 3.4 percent. However, the IMF does not see “significant risks” of deviations from this baseline forecast, but specify that it can be implemented much more restrained pace of global activity.

“To prevent such an outcome, policy should be designed to defuse trade tensions, strengthen multilateral cooperation and to ensure timely support of economic activities where it is necessary”, – the report says.

The IMF predicts overall synchronous slowdown for most world economies.

Developing countries to pull down trade war, the damage from which is estimated in the amount of about $ 700 billion by 2020, and uncertainty in geopolitics.

The growth of the service sector in much of the world does not decrease, resulting in advanced economies to remain robust situation on the labour market and steady wage growth.

In countries with developed economies will put pressure on low productivity growth and an aging population.

In particular, the economy of Europe in 2019 will increase by only 1.2 percent, and next year – by 1.4% (forecast procentnyh worsened by 0.2 points).

So, in the first half of 2019, the demand for goods produced in Germany, in the international market was lower than expected. The country is actually approaching recession.

This was one of the reasons that growth of German economy this year will grow by just 0.5 percent. Next year this figure should reach 1.2 percent. This is 0.5 percentage point less than forecast in July.

German Chancellor Angela Merkel reiterated Tuesday in Berlin, called the current development of the situation “disturbing” and a possible unregulated British exit from the EU – one of the factors that influenced the current situation.

On the economy the UK will also be affected by uncertainty due to Brexit. But the situation is not as critical as in Germany – this year, the Foundation promises to 1.2 percent growth in 2020 is 1.4 percent.

However, in Italy is even worse – zero growth by the end of 2019 and rise 0.5 percent next year.

Spain analysts of IMF predict GDP growth of 2.2 percent this year and 1.8 percent next. For France, this 1.2 percent and 1.3 percent, respectively.

As for the hero of the fall of the world economy of America, Fund analysts do not expect a gradual growth, as is the case with other countries of the West.

So, if last year the US economy grew by 2.9 percent, but this year the IMF promises only 2.4 percent, and the next even less – 2.1%.

The other pole of the global economy to developing Asia – the forecast is lowered by 0.3 percentage points to 5.9 percent in 2019 and to six percent in 2020.

China’s GDP last year grew by 6.6 percent this year, the IMF believes that it will be 6.1 percent, and 5.8 percent.

Not expected to grow actively and in Latin America and the Caribbean due to the weak flow of investment and reduce consumption.


Ukraine – in the group of developing Europe

The international monetary Fund introduced a new economic classification of countries, according to which Ukraine is included into the group of Emerging and Developing Europe (New and developing Europe), and a group of Commonwealth of independent States was removed.

Earlier, Ukraine was among the CIS, but since October, the four CIS countries (Belarus, Moldova, Russia and Ukraine) are included in regional group of the New and developing Europe.

The remaining eight countries – Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, which consisted of a regional subgroup of the Caucasus and Central Asia together with the Middle East, North Africa, Afghanistan and Pakistan, and will form a new regional group in the Middle East and Central Asia.

In respect of economy of Ukraine, the IMF has improved its growth forecast from 2.7 to three percent. At this level, is expected to remain the growth of the Ukrainian GDP in 2020. Thus, the forecast for next year remains the same.

The IMF also believes that inflation in Ukraine by the end of 2019 will slow to seven percent from the current 7.5 percent (annualized). In 2020, the growth of consumer prices will slow further to 5.6 percent.

The government and the national Bank expects to slow inflation in Ukraine up to five percent by the end of 2020.

The international monetary Fund has also significantly improved the forecast for the hryvnia to the dollar in five years – an average of two hryvnia stronger. According to IMF calculations, the hryvnia to the dollar will be:

  • 2019 – 26,75 hryvnia per dollar
  • 2020 – 27,72 hryvnia per dollar
  • 2021 – 28,70 hryvnia per dollar
  • 2022 – 29,67 hryvnia per dollar
  • 2023 – of 30.64 hryvnia per dollar
  • 2024 – 31,61 hryvnia per dollar

According to the National Bank, at the moment, the average rate of hryvnia since the beginning of the year is 26,28 per dollar.

Why the hryvnia has fallen and a dollar to wait


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