Ukraine’s economy continues its strong post-Covid recovery

Ukraine’s economy continues its strong post-Covid recovery

🔵 Ukraine’s economy continues its strong post-Covid recovery. The NBU said in a major online press release that “the 2020 GDP fall (by 4.2%) turned out to be less pronounced than expected at the onset of the coronavirus crisis (by 6%). The adverse impact of the stricter quarantine restrictions imposed in January on the economy was only temporary. Business sentiment improved significantly after the January lockdown was lifted. In February, industrial companies reported positive expectations of their business performance, for the first time in the last four months. The expectations of the trade and services sectors almost reached the equilibrium level. The global economy has also rebounded on the back of the rolling out of vaccination campaigns and large-scale stimulus programs.”

🔵 During a Key Policy Rate Discussion hosted by the NBU Monetary Policy Committee (MPC), the Central Bank leadership has revealed that inflation has increased noticeably in 2021. “More specifically, in January, as expected, inflation overshot the upper boundary of the target range of 5% ± 1 pp. According to the NBU’s online monitoring data, in February consumer prices rose at a faster pace than envisaged in the baseline macroeconomic forecast.”

🔵 Six MPC members favor upping the key policy rate to 6.5%, in line with the baseline scenario of the NBU’s overall forecast. The leadership of the Central Bank agreed that the it would have to continue to up the key policy rate in order to decrease underlying inflationary pressures and to smooth out potential volatility.

🔵 The government is currently working on the gradual transform of the economy towards carbon-neutral development, and steps to implement the Paris Agreement. This will bring Ukraine closer to the European Green Course and to the provisions of the Association Agreement with the EU. Said Prime Minister Denis Shmygal during a meeting to discuss the preparation of Ukraine’s second nationally determined contribution to the Paris Agreement (Ukrinform).

🔵 According to a senior government official who spoke to Ukrinform, “Ukraine is an active participant in the global fight against climate change and adaptation to it. That is why today our main task is to ensure that the second NVB to the Paris Agreement, formed in the final, meets the long-term goal of achieving carbon neutrality no later than 2060, but at the same time is realistic. Vectors of development of sectors of the Ukrainian economy must be economically and ecologically balanced.”

 

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