Macroeconomic Forecast Ukraine

June 2005 | Macroeconomic Forecasts

In the most concrete articulation of its medium-term economic plans to date, the government in early June said that it aimed to boost real GDP growth to 9.5% in 2006 from the 8.2% officially forecast for this year, while reducing end-year inflation to 9.3% from 2005's estimated 9.8%. Indicating that a budget deficit ceiling of 2.0% of GDP would be set, up from this year's 1.6%, Prime Minister Tymoshenko said that economic growth would be boosted by increased government spending on investment in the space and aircraft industry, agriculture, coal mining, and the construction and transport sectors. Growth would be further driven by cutting the tax burden and reducing the regulatory load on business. State investment in big industry has been cut this year to create room for significant pension and wage rises. With growth slowing, and inflation mounting, the proposed focus on investment next year is encouraging, assuming the funds are properly administered. Nevertheless, much of the social spending increases implemented by the previous and current governments in 2004-05 is recurrent, suggesting continued pressure on both the budget and inflation

If you would like to subscribe to Russia and CIS Monitor and gain instant access to this article, please click here to subscribe.

If you would like to take a trial to Russia and CIS Monitor please click on the trial link below.