Macroeconomic Forecast Ukraine

Ukraine's international reserves continue to drop sharply, reaching US$32bn in November 2011 (a 15% decline from September) as capital flight and a front-loaded sovereign debt profile continue to place pressure on the country's currency peg and reserves. We expect Ukraine to continue to implement capital controls to attempt to stem capital flight and defend the peg, however, we do not expect these to be effective, and hold to our end-2011 forecast for reserves to reach US$30bn, dropping further in mid-2012, and then recovering to US$32bn by end-2012.

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