Macroeconomic Forecast Ukraine

Inflation has been dropping steadily in Ukraine, declining from double digits of 12% to reach 4.2% in September, prompting us to cut our year-end forecast to 9%, down from 11.5% previously. That said, we believe inflationary pressures are likely to pick up in 2012 on the back of elevated gas costs that are likely to be implemented to some degree. Furthermore, we highlight the potential for a devaluation due to growing pressures on the hryvnia's peg as a serious upside risk to our inflation forecast.

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