A further deterioration of the political crisis in Ukraine will drag on growth in the coming years. Nevertheless, a modest recovery in house- hold consumption and industrial production will bring GDP growth back to positive territory in ---- and ----. Quarterly Update: We have left our forecast for real GDP growth in Ukraine unchanged for ---- (-.- ) and ---- (-.- ), but caution that a further deterioration of the politi- cal situation could negatively affect our growth forecasts for the coming years. The resignation of Ukraine s technocratic economy minister Aivaras Abromavicius and the likelihood of a cabinet reshuffle in the coming weeks will stall Ukraine s economic reform programme further (see Stalled Reforms To Have Large Implications , February -) . Among other things, the government will need to tackle endemic corruption, reform the banking sector and privatise many state-owned companies to prevent economic growth from falling further in the years ahead (see chart below). ...There is some scope for fixed investment to increase in ---- and ----, as relative peace in eastern Ukraine is likely to hold in the coming years. However, any rebuilding efforts will be constrained by a lack of government funds.
...---- ----e ----f ----f ----f ----f Private final consumption, UAHbn -,---.- -,---.- -,---.- -,---.- -,---.- -,---.- Private final consumption, of GDP --.- --.- --.- --.- --.- --.- Private final consumption, real growth y-o-y --.- ---.- -.- -.- -.- -.- ----f ----f ----f ----f ----f ----f Private final consumption, UAHbn -,---.- -,---.- -,---.- -,---.- -,---.- -,---.- ...---- ----e ----f ----f ----f ----f Private final consumption, UAHbn -,---.- -,---.- -,---.- -,---.- -,---.- -,---.- Private final consumption, of GDP --.- --.- --.- --.- --.- --.- Private final consumption, real growth y-o-y --.- ---.- -.- -.- -.- -.- ----f ----f ----f ----f ----f ----f Private final consumption, UAHbn -,---.- -,---.- -,---.- -,---.- -,---.- -,---.- Private final consumption, of GDP --.- --.- --.- --.- --.- --.- Private final consumption, real growth y-o-y -.- -.- -.- -.- -.- -.- e/f = BMI estimate/forecast. ...Although reforms are proceeding sluggish, the government has implemented measures to reduce its overall pensions burden as well as removed many energy subsidies, which has led to a ---.- gas price increase on average for households. Because of Ukraine s precarious financial position, it is expected that the IMF, at least until ----, will remain the primary creditor
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