Analysts upgraded their consensus forecast

On 19 July 2007, ICPS Economic Analysis and Publications Director Oleksiy Blinov participated in a quarterly macroeconomic forecasting seminar. This event was organized by the Ministry of the Economy with the support of the United Nations Development Program (UNDP) as part of the Millennium Development Goals (MDG) project. During the seminar, organizations presented their macroeconomic forecasts for 2007–2008 and their medium-term forecasts for 2009–2011.

The results of H1’07 demonstrated a continuing positive dynamic of economic growth. This was reflected in the upgraded forecast estimates of participants in the seminar.

The majority of organizations forecast high investment activity among companies. The need for commodity producers to attract financial resources in order to introduce energy-saving technologies and to upgrade fixed assets to manufacture competitive products in the environment of growing prices for energy resources will provide incentives for investment activity and the attraction of foreign capital.

Estimates of participants related to wages continue to be high and outpace the forecasted growth of the real GDP. The consensus estimate of the average monthly wage in 2007 grew 1.9%, to UAH 1,286. The consensus forecast for the growth in real disposable personal incomes in 2007 is 11.9%, a 1.9 pp increase compared with the previous consensus forecast.

The consensus estimate for the average annual UAH/USD exchange rate in 2007 remained at the level of the March forecast—UAH 5.06/1 USD. According to experts, the main risk is that of political instability, that is, uncertainty in the expectations before and after the pre-term Verkhovna Rada elections. This could result in shrinking foreign capital flows, a shortage of foreign currency, shrinking international reserves of the NBU, accelerating inflationary processes, an unstable exchange rate, slower growth of output and investment and growing defaults in payments.

Indicators for this consensus forecast are determined as the average of all forecasts provided by participating government, nongovernment and international organizations.

Greater detail on these quarterly macroeconomic forecasts can be found on the Economy Ministry’s website at http://www.me.gov.ua/control/uk/publish/article?art_id=103738&cat_id=38461 (in Ukrainian).