Ministry of Economy: The main trend in 2023 will be devaluation, but mild

The Ministry of Economy assumes that in 2023 there may be a certain devaluation and believes that the National Bank also included it in its forecast. This was reported by First Deputy Minister Denys Kudyn, writes Interfax-Ukraine.

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What will happen to the course

“I would not consider the revaluation option. We believe that the main trend will be a devaluation, but a soft, gradual, non-critical one and in general corresponding to the domestic situation,” he said, expressing confidence that the National Bank will keep the situation on the foreign exchange market under control and continue the policy of a fixed exchange rate.

Forecasts of the Ministry of Economy

“Our forecast is 3.2% growth in 2023, until we correct it,” he said during the additional session of answers and questions of the annual Ukraine Economic Outlook conference.

Kudin explained that the business was able to adapt better than expected to the new conditions of power outages caused by Russian shelling, for example, if the Ministry of Economy initially predicted a decline in GDP in December by 37%, now it estimates it at 35%.

According to him, the department, together with Ukrenergo and oblenergo, managed to directly provide relatively acceptable working conditions for approximately 1,000 large industrial consumers, taking into account their underloading and readiness to change work schedules, including night ones.

Read: Five key conclusions of the NBU about the state of the Ukrainian economy (infographic)

“Therefore, we do not aggravate our forecast because of the energy industry,” Kudin noted, but added that the risk of blackouts remains among the main risks of 2023.

He also indicated that he considers the government’s optimistic improvement of the inflation forecast for 2023 from 20.8% to 18.7%, while the state budget was adopted taking into account the forecast of 28%, and in the Memorandum with the IMF, inflation this year was estimated at 22.5 %.

“This is an optimistic figure, I would like it to be so,” Kudin commented on the new inflation forecast from the National Bank.

At the same time, he added that there are reasons for inflation forecasts to be lower than expected in the fall, in particular, the decrease in world gas prices from $1,300 per thousand cubic meters to $900 per thousand cubic meters.

Read: The National Bank predicts a slowdown in inflation in the coming years

The representative of the Ministry of Economy drew attention to the fact that in the conditions of the war in 2022, a rather large regional disproportion of consumer prices appeared in Ukraine.

According to him, if earlier the majority of companies considered Ukraine to be a single market, now due to the war risk in the front-line regions the prices are much higher, in the center the products are cheaper, while in Western Ukraine due to the increase in the number of consumers the prices are higher again.

Kudin also noted that he considers the National Bank’s pessimistic view of the balance of payments to be unnecessary.

“The NBU has more tools to correctly forecast this indicator, but, according to our estimates, it is the second one. We will close January soon and we will see the results,” said the first deputy minister of the Ministry of Economy.

In his opinion, the outflow of funds from Ukraine via payment cards in 2023 may decrease by 2-3 times due to the reduction of the savings of Ukrainian citizens who left the country, while the picture is different for receipts in Ukraine, and they may reach the traditional $1 billion for a month

• Inflation
• GDP
• Currency
• Economy

Source: Ministry of Finance

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