Kiev: Ukraine’s economy should pick up next year and grow 1.0 per cent, the central bank said on Wednesday, after a sharp contraction this year due mainly to the impact of the crisis in eastern Ukraine.
The bank did not say what would drive growth but the government has said the economy will expand next year if a package of tax laws, including changes to income and corporate taxes, is adopted, making the country more attractive to investors.
Parliament is expected to discuss the package soon, possibly next week, after delaying a debate on it on Tuesday due to a lack of lawmakers present.
The central bank, in a statement, also said that inflation would average 9 per cent in 2015. The annual inflation rate stood at 14.2 per cent in August, the latest data.
Ukraine has already received two disbursements under a $17 billion International Monetary Fund bailout this year. The IMF said this month that the country might need as much as $19 billion in extra funds from donors if its conflict with pro-Russian separatists continues into 2015.
The head of the central bank, Valeria Hontareva, said last week that gross domestic product (GDP) could contract by as much as 10 per cent this year, against 6.5 per cent previously predicted by the IMF, due to the conflict in eastern Ukraine where government forces are battling pro-Russian separatists.
The bank said its forecast for 1 percent growth in 2015 had been accepted by the IMF in talks with Ukraine authorities but it was unclear whether that was also the IMF’s forecast. The central bank had not previously given a GDP estimate for 2015.
The Ukraine government expects GDP to shrink by 6 per cent this year and grow by 2 per cent in 2015 if the tax package is adopted.