KYIV, June 25 – Ukraine’s economy is severely impacted by the coronavirus pandemic due to poor level of savings at households as the 2.5-month lockdown had dramatically reduced consumption, an International Monetary Fund official said Thursday.
The economy is forecast to contract 8.2% on the year in 2020, one of the worst expected performances in the region, underscoring the virus impact, Goesta Ljungman, IMF Resident Representative in Ukraine, said.
The National Bank of Ukraine has recently said the economy will probably contract more tan 5% on the year in 2020, worse than has been previously thought, due to the coronavirus pandemic.
Ljungman said two factors are playing a significant role in Ukraine’s dismal economic performance, including lack of savings at households and also limited fiscal support from the government.
Ukraine’s economy contracted 1.3% on the year in the first quarter, according to the State Statistics Service. Data released last month indicated the Q1 contraction was at about 1.5% on the year.
Ukraine, which locked down its economy in the middle of March, has started to gradually reopen in May, but the developments had led to resurgence of coronavirus cases to levels that triggered major concerns at the government.
Ukraine started to open more hospitals to accommodate coronavirus patients, and the government is weighting on potentially strengthening restrictions.
The daily rise of coronavirus cases hit a new high of 940 on Wednesday, bringing the total to 39,014, with 1,051 deaths. Most new cases were registered in west Ukraine and the capital.
The IMF in early June downgraded the forecast for a decline in Ukraine's GDP in 2020 to 8.2% from 7.7% in its World Economic Outlook for April.
The IMF also lowered its forecast for the recovery of the Ukrainian economy in 2021 from 3.6% to 1.1%, accelerating to 3% in 2022.
IMF expectations are significantly worse than those of the government and the National Bank of Ukraine that range between 4.8 and 5% contraction. (tl/ez)