Boston, MA -- (SBWIRE) -- 07/07/2014 -- Core Views:
- EU/IMF financing package will require reforms, including: FX liberalisation (although this is likely to be implemented in stages), partial removal of gas subsidies and potentially pension reform. An emergency financing package without conditions may be provided in order to prevent default in 2014.
- Russia will not relinquish Crimea, although whether that's part of a semi-independent state (e.g. Transnistria, Abkhazia etc.), or more formally part of Russian Federation is hard to call. To limit fallout with the West we think the former, but recent vote by Crimean parliament to join Russia may push their hand. We see political risks as likely to threaten growth over the next 12 months, as the government is forced to decide over closer relations with the EU or Russia.
- Putin will be happy with Crimea for now, and will not push military intervention into North East of Ukraine. Ethnic divisions in NE Ukraine not nearly as clear cut as Crimea, and it would benefit Putin to retain a large ethnic Russian influence in mainland Ukraine (enabling him to maintain a direct political stake in Ukrainian affairs).
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Major Forecast Changes:
- We have downgraded our outlook for real GDP growth for 2014, and now expect GDP to contract by 4.1% in 2014. This change reflects our expectations for hryvnia devaluation and concomitant impact on household purchasing power, the Crimean conflict dampening fixed investment and expectations of a retrenchment in government spending.
Key Risks To Outlook:
- A sharper than expected devaluation could trigger major shockwaves through the domestic economy, particularly within the financial sector which has barely recovered from the 2008 devaluation. Existing capital buffers may prove insufficient to deal with a devaluation of 30% magnitude or greater.
- We see huge challenges surrounding the ability of the interim government to pass the unpopular reforms required to gain access to a full IMF/EU funding package. Removing gas...
The Ukraine Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Ukraine and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..
An influential new analysis of Ukraine's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).
- Forecast the pace and stability of Ukraine's economic and industry growth through end-2017.
- Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
- Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
- Contextualise Ukraine's country risks against regional peers using BMI's country comparative Risk Ratings system.
- Evaluate external threats to doing business in Ukraine, including currency volatility, the commodity price boom and protectionist policies.
The Ukraine Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.
How will the Ukraine economic policy-making and performance impact on corporate profitability over 2013-2017?
BMI provides our fully independent 5-year forecasts for Ukraine through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.
Economic Outlook Contents
The Ukraine Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.
Key Areas Covered:
- Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
- BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.
- Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
- Balance of Payments - trade and investment, current and capital account.
- Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
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