Shmygal: Ukraine’s GDP to drop 3.9%, shrink to $135.5 billion, in 2020

Ukraine’s gross domestic product will shrink by 3.9% this year, according to a new government estimate.

The government’s initial forecast for 2020 was positive: GDP would grow by 3.7%. Now, because of the COVID-19 pandemic, it will experience a decline, Prime Minister Denys Shmygal said in a March 30 statement on the Cabinet of Ministers’ website.

According to the government’s new macroeconomic forecast, Ukraine’s GDP will shrink from the expected Hr 4.51 trillion ($153 billion) to Hr 4 trillion ($135.5 billion) and the unemployment rate will rise from the current 8.1% to 9.4% by the end of the year.

“We may not be happy with all the numbers, but we expect an improvement of the economic forecast in the second half of the year,” said Shmygal.

Meanwhile, Ukraine’s 2020 inflation rate is estimated to be 8.7% compared to the 5.6% planned back in November.

Ukraine’s average wage will shrink to Hr 11,000 ($372) due to the rise of unemployment and currency depreciation.

The new long-term currency exchange rate is expected to be Hr 29.5 for $1. The current 2020 budget expected an exchange rate of Hr 27 per $1. In March, Ukraine’s national currency, the hryvnia, lost 11% of its value and is now converted at a rate of Hr 29 for $1. 

In total, budget revenue in 2020 will decrease by Hr 123 billion ($4 billion), with the government planning to cut expenditures for education, culture and sports. 

The Cabinet gathered on March 29 to discuss amendments to the national budget amid the ongoing COVID-19 pandemic, which has killed over 30,000 people worldwide and 11 in Ukraine as of March 30. 

The original 2020 budget was adopted by the Cabinet of former Prime Minister Oleksiy Honcharuk in November 2019. Now, the budget is being amended to take into account the economic downturn caused by COVID-19 and the nationwide quarantine Ukraine imposed on March 12. 

The amendments will be up for a vote in parliament during an emergency session on March 30.