MINISTRY OF ECONOMIC DEVELOPMENT AND TRADE OF UKRAINE

Transcription

1 MINISTRY OF ECONOMIC DEVELOPMENT AND TRADE OF UKRAINE United Nations Development Programme in Ukraine (UNDP) GI Institute of Economics and Forecasting of the National Academy of Sciences of Ukraine Scientific and Research Economic Institute (SREI) Institute of Economic Research and Policy Consulting The National Institute for Strategic Studies Ukraine: perspectives of the development Institute of Evolutionary Economics G. M. Dobrov Center for Studying R&D Potential and Science History CONSENSUS FORECAST Federation of employers of Ukraine Representative of the International Monetary Fund in Ukraine International Centre of Policy Studies CASE Ukraine Raiffeisen Bank Aval OTP Bank The Bleyzer Foundation Issue 31, 2012 FOREX CLUB 1

2 UKRAINE: PERSPECTIVES OF THE DEVELOPMENT (CONSENSUS FORECAST) is a publication by the Ministry of Economic Development and Trade of Ukraine (MEDT) prepared by the Department of macroeconomic forecasting with support of the United Nations Development Programme (UNDP) in the framework of the Acceleration of the Millennium Development Goals Ukraine Project (AMDGP). It will be useful to the government officials, experts of central and local executive authorities, academia, representatives of public organizations, and everyone interested in the matters of the country s socioeconomic development and macroeconomic forecasting. The publication contains materials presented during the seminar on macroeconomic forecasting held on 22 November Seminars on forecasting aim to improve the quality of macroeconomic forecasts by means of expert discussions (of forecasts, current economic tendencies, results of research), achieving the consensus concerning the prospective vision of further ways of the country s development, and exchange information among major forecasting organizations (governmental institutions, international financial organizations, scientific research institutes, analytical centres, nongovernmental organizations, etc.). The issue was prepared by: Natalya Horshkova Inna Mogilat Sergey Bokun Natalia Kovalenko Natalia Sitnikova Kateryna Kuritsyna Tetyana Bolila bokun@me.gov.ua, natalia.sitnikova@undp.org. Contact phone numbers: (044) Reference to sources of materials is mandatory Ministry of Economic Development and Trade of Ukraine 2

3 CONTENTS MAIN MACROECONOMIC INDICATORS FOR DYNAMICS OF THE CONSENSUS FORECAST FOR SHORT OVERVIEW OF CONSENSUS ASSUMPTIONS 7 FORECAST OF MACROECONOMIC INDICATORS FOR FORECAST OF MACROECONOMIC INDICATORS FOR (AVERAGE) RISKS FOR TABLES Consensus Forecast is an "averaged" value of the most important forecast economic development indicators of Ukraine calculated on the basis of expert estimates provided by participants of the Consensus Forecast survey. The consensus forecast for presented in the publication has been calculated on the basis of materials provided by the experts of the Ministry of Economic Development and Trade of Ukraine, GI Institute of Economics and Forecasting of the National Academy of Sciences of Ukraine, Economic Research Institute, Institute of Economic Research and Policy Consulting, National Institute for Strategic Studies, Institute of Evolutionary Economics, G. M. Dobrov Center for Studying R&D Potential and Science History, Federation of employers of Ukraine, Representative of the International Monetary Fund in Ukraine, International Centre for Policy Studies, CASE Ukraine, Raiffeisen Bank Aval, OTP Bank, The Bleyzer Foundation and FOREX CLUB. The Consensus Forecast is based on the consultations and discussions with the experts. We would like to highlight that all the forecast indicators presented by the participants of the seminar are only independent expert estimates and not official forecasts of the relevant institutions. We express deep gratitude to all the experts who participated in the Consensus Forecast initiative. 3

4 MAIN MACROECONOMIC INDICATORS FOR Table 1 Real sector, UAH mln Indicator Nominal GDP Consumption Investments Net export of goods and non-factorial services Index, year to year Actual GDP 107,9 102,3 85,2 104,1 105,2 Consumption 113,6 110,1 87,8 106,4 110,7 Gross accumulation of the fixed capital 123,9 98,8 49,5 103,9 110,1 Exports of goods and services 103,3 105,7 78,0 103,9 102,2 Imports of goods and services 121,5 117,0 61,1 111,3 116,8 Inflation, index Consumer price index (annual average) 112,8 125,2 115,9 109,4 108,0 Dec. versus Dec. of the previous year 116,6 122,3 112,3 109,1 104,6 Producer price index (annual average) 119,5 135,5 106,5 120,9 119,0 Dec. versus Dec. of the previous year 123,3 123,0 114,3 118,7 114,2 External sector, USD mln Current account Exports of goods and services Imports of goods and services Foreign direct investments External sector, USD mln Current account -3,7-7,1-1,5-2,2-6,2 Exports of goods and services 44,8 47,6 46,3 50,8 53,8 Imports of goods and services 50,6 55,6 47,9 53,7 59,9 Foreign direct investments 6,5 5,5 4,0 4,2 4,2 External sector, % year to year (nominal) Exports of goods and services 127,4 133,8 63,4 127,7 128,3 Imports of goods and services 135,4 138,5 56,2 130,3 135,2 Rate of exchange, UAH/USD Average 5,05 5,27 7,79 7,94 7,97 End of period 5,05 7,70 7,99 7,96 7,99 Consolidated budget, UAH mln All revenues All expenditures (including lending) Total balance Privatisation Consolidated budget, % of GDP All revenues 30,5 31,4 29,9 29,1 30,3 All expenditures (including lending) 31,6 32,9 34,0 35,0 32,0 Total balance -1,1-1,5-4,1-5,9-1,8 Privatisation 0,3 0,05 0,1 0,1 0,9 Money and credit Base money (as of the end of period), UAH mln Dec. versus Dec. of the previous year, % 46,0 31,6 4,4 15,8 6,3 Money Supply (M3) (as of the end of period), UAH mln Dec. versus Dec. of the previous year, % 51,7 30,2-5,5 22,7 14,7 Monthly average wage of workers, UAH Nominal adjusted to the CPI, % to previous year 115,0 106,8 91,0 109,7 108,9 4

5 DYNAMICS OF THE CONSENSUS FORECAST FOR 2010 (April 2009 November 2010) Table 2 Real sector, UAH mln Показник 2010 report April 2009 (April 2009 / Report 2010) March 2010 (March 2010 / Report 2010) November 2010 (November 2010 / Report 2010) Nominal GDP ,6% ,4% ,3% Consumption ,1% ,2% ,5% Investments ,4% ,7% ,6% Net export of goods and non-factorial services Index, year to year Actual GDP 104,1 101,7-2,4 р.р. 103,4-0,7 р.р. 104,2 +0,1 р.р. Consumption 106,4 102,9-3,5 р.р. 101,9-4,5 р.р. 102,7-3,7 р.р. Investments 103,9 104,1 +0,2 р.р. 106,2 +2,3 р.р. 106,5 +2,6 р.р. Inflation, index Consumer price index (annual average) 109,4 114,6 +5,2 р.р. 111,6 +2,2 р.р. 109,7 +0,3 р.р. Dec. versus Dec. of the previous year 109,1 113,2 +4,1 р.р. 112,5 +3,4 р.р. 112,2 +3,1 р.р. Producer price index (annual average) 120,9 116,5-4,4 р.р. 114,2-6,7 р.р. 118,0-2,9 р.р. Dec. versus Dec. of the previous year 118,7 115,1-3,6 р.р. 114,0-4,7 р.р. 118,2-0,5 р.р. External sector, USD mln Current account Exports of goods and services ,6% ,3% ,2% Imports of goods and services ,1% ,1% ,1% Foreign direct investments External sector, % of GDP Current account -2,2-0,2 +2,0 р.р. -0,4 +1,8 р.р. -0,6 +1,6 р.р. Exports of goods and services 50,8 54,5 +3,7 р.р. 47,3-3,5 р.р. 49,3-1,5 р.р. Exports of goods and services 53,7 55,7 +2,0 р.р. 48,5-5,2 р.р. 50,6-3,1 р.р. Foreign direct investments 4,2 5,4 +1,2 р.р. 4,1-0,1 р.р. 3,4-0,8 р.р. External sector, % year to year (nominal) Exports of goods and services 127,7 111,6-16,1 р.р. 114,2-13,5 р.р. 121,8-5,9 р.р. Exports of goods and services 130,3 110,7-19,6 р.р. 111,9-18,4 р.р. 119,8-10,5 р.р. Rate of exchange, UAH/USD Average 7,94 9,10 +14,6% 8,23 +3,7% 7,93-0,1% End of period 7,96 9,43 +18,5% 8,16 +2,5% 7,97 +0,1% Consolidated budget, UAH mln All revenues ,3% ,4% ,7% All expenditures (including lending) ,6% ,1% ,7% Total balance Privatisation Consolidated budget, % of GDP All revenues 29,1 30,3 +1,2 р.р. 29,9 +0,8 р.р. 31,1 +2,0 р.р. All expenditures (including lending) 35 32,2-2,8 р.р. 34,4-0,6 р.р. 36,4 +1,4 р.р. Total balance -5,9-1,9 +7,8 р.р. -4,6 +1,3 р.р. -5,3 +0,6 р.р. Privatisation 0,1 0,4 +0,3 р.р. 0,5 +0,4 р.р. 0,3 +0,2 р.р. Money and credit Base money (as of the end of period), UAH mln ,3% ,4% ,4% Dec. versus Dec. of the previous year, % 15,8 14,8-1,0 р.р. 13,8-2,0 р.р. 15,8 0 Money Supply (M3) (as of the end of period), UAH mln ,9% ,5% ,2% Dec. versus Dec. of the previous year, % 22,7 20,3-2,4 р.р. 15,9-6,8 р.р. 19,8-2,9 р.р. Monthly average wage of workers, UAH ,7% ,7% ,1% 5

6 DYNAMICS OF THE CONSENSUS FORECAST FOR 2011 (March 2010 November 2011) Table 3 Показник Real sector, UAH mln 2011 report March 2010 (March 2010 / Report 2011) March 2011 (March 2011 / Report 2011) November 2011 (November 2011 / Report 2011) Nominal GDP ,5% ,6% ,7% Consumption ,2% ,0% ,8% Investments ,9% ,9% ,1% Net export of goods and non-factorial services Index, year to year Actual GDP 105,2 104,7-0,5 р.р. 104,6-0,6 р.р. 104,7-0,5 р.р. Consumption 110,7 104,5-6,2 р.р. 104,3-6,4 р.р. 107,1-3,6 р.р. Investments 110,1 109,3-0,8 р.р. 111,3 +1,2 р.р. 110,8 +0,7 р.р. Inflation, index Consumer price index (annual average) 108,0 110,6 +2,6 р.р. 110,3 +2,3 р.р. 109,2 +1,2 р.р. Dec. versus Dec. of the previous year 104,6 110,1 +5,5 р.р. 111,1 +6,5 р.р. 109,0 +4,4 р.р. Producer price index (annual average) 119,0 111,5-7,5 р.р. 116,3-2,7 р.р. 118,5-0,5 р.р. Dec. versus Dec. of the previous year 114,2 111,1-3,1 р.р. 116,5 +2,3 р.р. 119,6 +5,4 р.р. External sector, USD mln Current account Exports of goods and services ,4% ,3% ,16% Imports of goods and services ,3% % ,95% Foreign direct investments External sector, % of GDP Current account -6,2-0,7 +5,5 р.р. -2,3 +3,9 р.р. -3,9 +2,3 р.р. Exports of goods and services 53,8 45,4-8,4 р.р. 50,5-3,3 р.р. 53,0-0,8 р.р. Exports of goods and services 59,9 46,8-13,1 р.р. 53,4-6,5 р.р. 57,4-2,5 р.р. Foreign direct investments 4,2 4,4 0,2 р.р. 4,0-0,2 р.р. 3,6-0,6 р.р.. External sector, % year to year (nominal) Exports of goods and services 128,3 111,9-16,4 р.р. 117,8-10,5 р.р. 126,4-1,9 р.р. Exports of goods and services 135,2 112,4-22,8 р.р. 117,9-17,3 р.р. 129,4-5,8 р.р.. Rate of exchange, UAH/USD Average 7,97 8,20 +2,9% 7,95-0,3% 7,98 +0,1% End of period 7,99 8,23 +3,0% 8,00 +0,1% 8,06 +0,9% Consolidated budget, UAH mln All revenues ,2% ,5% ,3% All expenditures (including lending) ,8% ,5% ,4% Total balance Privatisation Consolidated budget, % of GDP All revenues 30,3 30,4 +0,1 р.р. 29,4-0,9 р.р. 30,4 +0,1 р.р. All expenditures (including lending) 32,0 33,2 +1,2 р.р. 33,0 +1 р.р. 33,0 +1 р.р. Total balance -1,8-2,9-1,1 р.р. -3,7-1,9 р.р. -2,6-0,8 р.р. Privatisation 0,9 0,4-0,5 р.р. 0,8-0,1 р.р. 0,8-0,1 р.р. Money and credit Base money (as of the end of period), UAH mln ,2% ,9% ,7% Dec. versus Dec. of the previous year, % 6,3 14,6 +8,3 р.р. 14,3 +8,0 р.р. 11,4 +5,1 р.р. Money Supply (M3) (as of the end of period), UAH mln ,0% ,1% ,0% Dec. versus Dec. of the previous year, % 14,7 17,0 +2,3 р.р. 18,5 +3,8 р.р. 16,8 +2,1 р.р. Monthly average wage of workers, UAH ,6% ,2% ,7% 6

7 SHORT OVERVIEW OF CONSENSUS ASSUMPTIONS Consensus assumptions of macroeconomic forecast The main consensus assumptions of the participants of the seminar are shown in Table 4. Table 4 GDP, % real change: March 2011 August 2011 November : April 2012 August 2012 November 2012 World 4,1 4,1 3,4 3,0 3,1 2,9 4,1 3,4 3,2 Russian Federation 4,1 4,4 3,9 3,4 3,7 3,6 4,1 3,7 3,6 USA 2,7 2,7 2,0 1,8 1,9 1,9 2,7 2,0 1,9 China 7,9 8,2 Euro area/eu 1,7 1,7 1,1-0,3-0,3-0,1 1,7 0,9 0,5 Consumer Price Index, %, Dec to Dec: World 103,1 103,1 103,1 103,1 103,2 103,2 103,1 103,2 103,8 Russian Federation 107,3 107,4 106,7 106,2 105,8 106,0 107,3 106,4 106,3 USA 102,1 102,2 101,5 101,9 102,0 102,0 102,1 101,9 102,1 China 102,7 103,0 Euro area/eu 101,9 102,0 101,8 102,2 102,0 102,1 101,9 101,8 102,0 Exchange rate, ruble/usd 29,8 29,2 29,3 29,9 31,3 31,3 29,8 31,7 32,0 Exchange rate, euro/usd х х х 1,33 1,3 1,29 х 1,3 1,28 April 2012 August 2012 November 2012 Natural gas price, USD per 1 thousand cubic meters 292,9 365,6 386, , ,5 Oil price, USD/barrel (annual average) 103,2 110,0 100, ,3 107,6 103,2 106,5 102,4 7

8 Change in tariffs (Dec to Dec), %: Natural gas х х х 9,8 15,9 5,0 х 37 29,0 Electricity х х х 18,9 15 5,0 х 31,9 19,0 Water supply (utilities) х х х 12,2 12,6 8,8 х 14 18,3 Drainage system (utilities) х х х 12,0 11,6 15,0 х 13 18,2 Maintenance of buildings and structures and surrounding areas (rent) х х х 10,5 14,1 11,1 х 15 16,2 Heating х х х 12,6 14,4 8,2 х 32,5 25,0 Passengers, baggage and freight turnover by rail Public telecommunications services connection х х х 13,1 14,7 8,7 х 20,5 14,3 х х х 8,2 10,4 3,1 х Other assumptions NBU discount rate, %, as of the period end 7,8 7,8 7,4 7,5 7,5 7,5 7,8 7,3 7,4 Minimum wage, UAH (annual average) 1073,7 1100,0 1099,1 1109,6 1093,5 1099,6 1073,7 1213,0 1195,2 Budget revenue from privatization, million UAH 7263,5 8077,8 7692, ,0 7263,5 9487,5 9637,5 Gross grain yield, million tons 44,7 46,4 45,9 45,9 43,9 44,2 44,7 48,4 47,0 8

9 FORECAST OF MACROECONOMIC INDICATORS FOR We call your attention to the sixth version of the Consensus Forecast of the main macroindicators of Ukraine s economic and social development for 2012 and the third version of the Consensus Forecast of the main macro-indicators of Ukraine s economic and social development for 2013, calculated on the basis of materials provided by the attendees of the seminar (Tables. 9-13) year Figure 1. Consensus forecast of nominal and real GDP in year 9

10 2012 year Figure 2. Consensus forecast of price indices for year 10

11 2012 year Figure 3. Consensus forecast of main GDP components by end use category in year 11

12 2012 year Figure 4. Consensus forecast of private and government consumption and investments in year 12

13 2012 year Figure 5. Consensus forecast of average wage and people s real disposable income in year 13

14 2012 year Figure 6. Consensus forecast of growth in people s real disposable income and private consumption in year 14

15 2012 year Figure 7. Consensus forecast of banking indicators for year 15

16 2012 year Figure 8. Consensus forecast of net influx of foreign direct investments in year 16

17 2012 year Figure 9. Consensus forecast of volume of exports and imports of goods and services and average value of the negative current account balance in year 17

18 2012 year Figure 10. Consensus forecast of percentage of exports and imports of goods and services in the GDP structure and of the average value of negative current account balance in GDP in year 18

19 2012 year Figure 11. Consensus forecast of budgetary indicators in year 19

20 2012 year Figure 12. Consensus forecast of budgetary indicators as percentage of GDP in year 20

21 2012 year Figure 13. Consensus forecast of the monetary market indicators in year 21

22 FORECAST OF MACROECONOMIC INDICATORS FOR (AVERAGED) A forecast of basic macroeconomic indicators for the period from 2014 through 2015 has been presented for the third time (Table 13). Retention of the major financial problems in Europe and renewal of the recession trends in certain EU countries reduces the variation of forecasts in the medium term and creates conservative estimates of economic growth in Ukraine in average in years (fluctuations of 3% to 5%, consensus values 3.9%). Generally it is assumed that the main lever of economic growth is the expansion of investment demand: averaged value of the real growth of investment 5% rate with variation between of 2% to 9.3%, exceeding the average growth rate of real private consumption 4.6% with variation between of 3.3% to 5%. One of the factors forming the variation of forecast indicators given by experts for investment growth rate consists of stronger external risks of foreign companies curtailing investment plans or postponing implementation for the future period (averaged value of foreign direct investment is USD 7.8 billion variation of USD 6 billion to USD 9.1 billion) and keeping high intrinsic risk of low credit activity of the commercial banks. At the same time, according to the experts forecasts, general public administration expenditures will grow rather reservedly (the consensus estimate of the real growth rate of the state consumption is 2.1% with 2-2.3% variation). Thus giving consideration to the lessons learnt and implications of the Ukrainian economy s functioning under dynamic expansion of domestic consumer demand, analysts believe that in the medium-term perspective both the State and economic entities will pay greater attention to renewal of fixed assets, production upgrading, enhancement of scientific and technological potentials, and strengthening of competitiveness. As to the price situation, the experts mainly foresee keeping relatively low inflation rates for the medium term: averaged forecast indicators of consumer price index and producer price index (annual averages) are respectively 106.2% ( % variation) and 107.4% ( % variation). No consensus can be seen in medium-term forecast estimates of foreign trade development. In particular, current account balance estimates vary between minus 3.4% to minus 7.8% of GDP. The averaged value of goods and services export growth is 11.2% ( % variation), that for import being also 9.3% (6.7-15% variation). Accordingly, views on the medium-term currency exchange parameters are rather different. Forecasts for average annual exchange rate of hryvnia to US dollar for vary within UAH/USD (averaged value being UAH/USD 8.6). For the state budget-financed sector, the forecasters believe that budget spending will be greater than revenue in the medium term (averaged value of budget deficit is expected to be 1.2% of GDP for , maximal value being minus 1.4% of GDP). 22

23 Risks for We offer you a consensus assessment of risks for The experts assessed the risks by 2 criteria: probability of realisation of a specific risk and impact of the risk on the economy of Ukraine. The realisation of risks and their impact on the Ukrainian economy have been assessed according to the following scale: Probability of occurrence realization estimates considerable probability (50-60%%) of risk display 4; medium probability (30-49%%) of risk display 3; moderate probability (10-29%%) of risk display 2; small probability (under 10%) of risk display 1; the risk is not probable Estimates of the occurrence impact on the economy of Ukraine significant impact 4; moderate impact 3; small impact 2; insignificant impact 1; no impact 0. Based on the materials provided, an integral estimate of risks was calculated as a sum of occurrence probability estimates and occurrence impact on the economy of Ukraine weighed by the number of respondents. Risks for 2012 were estimated for the sixth time whereas risks for 2013 were estimated for the third time. The highest possible consensus estimate of foreign and domestic risks has the integral estimate 16. It is foreign risks that have appeared among leading ones in 2012: increasing the debt crisis in euro area (integral estimate is 11); failure to obtain planned financing from the IMF; deterioration of foreign economic conjuncture: recurrent landslide of prices at the world raw materials markets (integral estimate is 10), deficit of external funding and shrinkage of possibilities of access to the international capital markets; curtailing of investment plans by foreign companies or postponement of their realization terms for a future period (integral estimate is 9). At the same time, considering the Ukrainian economy s significant dependence on external factors, the latter s impact on the domestic market situation and pre-election year, expert estimates of domestic risks have grown. The highest integral estimate (13) among domestic risks has been given to: remaining low credit activity of commercial banks. Rather high position has been occupied by risks associated with significant growth in the state budget deficit and cash gaps of the Pension Fund, other state social insurance funds and Naftohaz Ukrainy NJSC; strengthening of devaluation tendencies at the monetary market (integral estimate is 12); delay in increase of tariffs for natural gas and public utilities (integral estimate is 11). At the same time, high integral estimate was given to: investors wait-and-see attitude during election campaign; large-scale capital outflow caused by lack of stability at foreign financial and raw material markets and reducing the volume of harvest in agriculture as a result of adverse weather conditions at the end of (integral estimate is 9) that is, however, lower August s estimate (integral estimates were 11,10 and11). Among foreign risks for 2013, as for 2012, high integral estimate belongs to the risk of increasing the debt crisis in euro area (estimate 11 for 2012 and 10 for 2013) and deterioration of external economic conjuncture: recurrent landslide of prices at the world raw materials markets (10). At the same time, expert s estimate of the risk of failure to obtain planned financing from the IMF and curtailing of investment plans by foreign companies or postponement of their realization terms for future period decreased as of 2012 from 8 to 10 and 8 to 9 accordingly. At the same, increased the integral estimate of the risk of deficit of external funding and shrinkage of possibilities of access to the international capital markets from 9 in 2012 to 10 (conversely, in August s issue the integral estimate was decreasing).

24 The risk of significant growth in the state budget deficit and cash gaps of the Pension Fund, other state social insurance funds and Naftohaz Ukrainy NJSC and strengthening of devaluation tendencies at the monetary market has the greatest integral estimate among domestic risks for 2013 (integral estimate 13). Besides, the forecasters have high estimates (integral estimate 11) of such risks as remaining low credit activity of commercial bank, risks of «a new wave» of destabilization in the banking sector and substantial increase in tariffs for natural gas for households. Also has increased integral estimate of the risk of accumulation of the population s negative inflation expectations from 7 to 9 for 2012 and 8 as of August 2012 for So, among estimated domestic risks for 2013, risks in tariff policy, banking and budgetary sectors remain the most likely and influential. Table 5 Integral estimates of Foreign risks for (as of November 2012) Foreign risks Integral estimate Estimates of Probability Probability the occurrence estimates of Integral estimates of impact on the occurrence estimate occurrence economy of realization realization Ukraine Estimates of the occurrence impact on the economy of Ukraine Failure to obtain planned financing from the IMF Deterioration of external economic conjuncture: recurrent landslide of prices at the world raw materials markets Increasing the debt crisis in euro area Strengthening of the military conflict in the Middle East Deficit of external funding and shrinkage of possibilities of access to the international capital markets Retention of the tendency of accelerated prices increase at the world energy markets Slow growth of the USA economy Euro devaluation and decrease of demand in the European Union Curtailing of investment plans by foreign companies or postponement of their realization terms for future period The probability of the countries leaving euro area Table 6 Integral estimates of Domestic risks for (as of November 2012) Domestic risks Integral estimate Probability estimates of occurrence realization Estimates of Probability the occurrence Integral estimates of impact on estimate occurrence Ukraine`s realization economy Estimates of the occurrence impact on Ukraine`s economy Remaining low credit activity of commercial banks Making economically groundless decisions on

25 Domestic risks sharp increase of social payments during electioneering Integral estimate Estimates of Probability Probability the occurrence estimates of Integral estimates of impact on occurrence estimate occurrence Ukraine`s realization realization economy Estimates of the occurrence impact on Ukraine`s economy Investors wait-and-see attitude during election campaign x x x Significant growth in the state budget deficit and cash gaps of the Pension Fund, other state social insurance funds and Naftohaz Ukrainy NJSC Large-scale capital outflow caused by lack of stability at foreign financial and raw material markets Delay in increase of tariffs for natural gas and public utilities Reducing the volume of harvest in agriculture as a result of adverse weather conditions at the end of Strengthening of devaluation tendencies at the monetary market Substantial increase of natural gas prices for municipal heat and power engineering enterprises Substantial increase of natural gas tariffs for industry Carrying out considerable emission to finance the budget deficit Risks of «a new wave» of destabilization in the banking sector Accumulation of the population s negative inflation expectations Accumulation of VAT refund debt Substantial increase of natural gas tariffs for the population Expansion of the real economy s insolvency Failure to conduct privatization of large entities Increase of debt on payment for housing and public utilities Growth of wage arrears Deterioration of the labour market situation: reduction of the quantity of the employed and increase in the quantity of the unemployed Increase of revaluation tendencies at the monetary market

26 Foreign risks Risks in March 2011 November 2012 March 2011 August 2011 Integral estimates of risks 2012 November April August 2012 Table 7 Increasing the debt crisis in euro area х х Failure to obtain planned financing from the IMF Deterioration of foreign economic conjuncture: recurrent landslide of prices at the world raw material markets Deficit of foreign funding and shrinkage of possibilities of access to the international capital markets Curtailing of investment plans by foreign companies or postponement of their realization terms for a future period November Slow growth of the USA economy х х Strengthening of the military conflict in the Middle East х х х Retention of the tendency of accelerated prices increase at the world energy markets Euro devaluation and decrease of demand in the European Union The probability of the countries leaving euro area х х х х 5 2 Domestic risks Remaining low credit activity of commercial banks Strengthening of devaluation tendencies at the monetary market Significant growth in the state budget deficit and cash gaps of the Pension Fund, other state social insurance funds and Naftohaz Ukrainy NJSC Delay in increase of tariffs for natural gas and public utilities Investors wait-and-see attitude during election campaign х х х Reducing the volume of harvest in agriculture as a result of adverse weather conditions at the end of Large-scale capital outflow caused by lack of stability at foreign financial and raw material markets х х х х х Expansion of the real economy s insolvency Making economically groundless decisions on sharp increase in social payments during electioneering Accumulation of VAT refund debt Risks of «a new wave» of destabilization in the banking sector Accumulation of the population s negative inflation expectations Deterioration of the labour market situation: reduction of the quantity of the employed and increase in the quantity of the unemployed Failure to conduct privatization of large entities Carrying out considerable emission to finance the budget deficit Substantial increase of natural gas tariffs for industry Substantial increase of natural gas prices for municipal heat and power engineering enterprises Substantial increase of natural gas tariffs for the population Growth of wage arrears Growth of debt for utility services Increase of revaluation tendencies at the monetary market

27 Risks in April 2012 November 2012 Table 8 Integral estimates of risks 2013 April 2012 August 2012 November 2012 External risks Deficit of foreign funding and shrinkage of possibilities of access to the international capital markets Deterioration of foreign economic conjuncture: recurrent landslide of prices at the world raw material markets Increasing the debt crisis in euro area Retention of the tendency of accelerated prices increase at the world energy markets Failure to obtain planned financing from the IMF х 8 8 Curtailing of investment plans by foreign companies or postponement of their realization terms for a future period Strengthening of the military conflict in the Middle East Slow growth of the USA economy Euro devaluation and decrease of demand in the European Union The probability of the countries leaving euro area х 6 4 Domestic risks Strengthening of devaluation tendencies at the monetary market Significant growth in the state budget deficit and cash gaps of the Pension Fund, other state social insurance funds and Naftohaz Ukrainy NJSC Remaining low credit activity of commercial banks Substantial increase of natural gas tariffs for the population Substantial increase of natural gas prices for municipal heat and power engineering enterprises Risks of «a new wave» of destabilization in the banking sector Accumulation of the population s negative inflation expectations Substantial increase of natural gas tariffs for industry Large-scale capital outflow caused by lack of stability at foreign financial and raw material markets Accumulation of VAT refund debt Expansion of the real economy s insolvency Deterioration of the labour market situation: reduction of the quantity of the employed and increase in the quantity of the unemployed Growth of debt for utility services Carrying out considerable emission to finance the budget deficit Delay in increase of tariffs for natural gas and public utilities Failure to conduct privatization of large entities Growth of wage arrears Increase of revaluation tendencies at the monetary market

28 Real sector Indicator Consensus forecasts for (as of November 2012) Table 9 Average MIN MAX MIN MAX UAH million Nominal GDP Consumption Private Government Gross investments Gross accumulation of the fixed capital Private Government Net export of goods and non-factorial services Gross national savings Index, year to year Real GDP 101,0 102,9 100,4 102,6 101,3 103,7 Consumption 106,6 103,5 102,9 109,0 100,2 105,6 Private 107,3 104,2 102,7 111,4 100,5 108,0 Government 102,7 101,0 100,8 109,2 97,9 104,4 Gross accumulation of the fixed capital 95,7 101,8 80,1 108,3 98,8 105,2 Exports of goods and services 97,8 101,8 94,3 102,1 96,0 103,1 Import of goods and services 102,9 103,3 100,4 106,3 96,8 106,2 Inflation Deflator of the GDP (annual average) 106,8 108,9 101,8 109,6 106,1 112,5 Consumer price index (annual average) 102,3 106,9 100,9 106,4 106,0 108,2 Dec. versus Dec. of the previous year 103,6 107,1 101,9 106,0 104,8 109,0 Producer price index (annual average) 105,8 109,1 103,7 109,8 105,0 116,7 Dec. versus Dec. of the previous year 106,1 108,4 102,7 109,2 105,5 115,5 index External sector USD million Current account Exports of goods and services Import of goods and services Revenue balance Official transfers (net value) Capital account balance Foreign direct investments External sector as percentage of the GDP Current account -6,9-6,3-9,4-5,7-10,7-3,2 Exports of goods and services 51,5 53,2 43,4 58,0 37,7 60,0 28

29 Indicator Average MIN MAX MIN MAX Import of goods and services -58,9-59,9-80,0-49,8-85,0-41,7 Revenue balance -1,1-1,6-11,0-0,4-7,0-1,2 Official transfers (net value) 1,8 2,1 0,2 7,0 0,2 8,0 Capital account balance 5,6 5,6 3,7 26,0 0,9 28,0 Foreign direct investments 3,4 3,5 2,8 17,0 2,6 17,0 External sector as percent, year to year (nominal) Exports of goods and services 102,2 107,5 97,2 105,6 102,6 112,8 Import of goods and services 105, ,0 108,7 95,9 112,9 Exchange rate, UAH / USD Average rate 8,08 8,55 8,00 8,20 8,30 9,00 End of period 8,41 8,81 8,20 8,80 8,35 9,5 Consolidated budget UAH million All revenues All expenditures Total balance Privatisation Consolidated budget % of GDP All revenues 30,9 31,6 30,0 32,0 29,4 32,1 All expenditures 33,4 33,3 32,5 33,7 31,4 33,4 Total balance -2,5-1,7-4,0-1,7-2,5-1,4 Privatisation 0,6 0,6 0,5 0,7 0,5 0,6 Money and credit Base money (as of the end of period), UAH mln Dec. versus Dec. of the previous year, % 10,3 10,0 1,0 13,1 5,5 16,4 Money supply (M3) (as of the end of period), UAH mln Dec. versus Dec. of the previous year, % 10,6 12,8 3,3 17,5 6,0 21,2 Weighted annual average rate on commercial banks credits in the national currency, %, as of the end of period 16,9 15,2 14,1 18,4 13,3 20,0 Gross NBU international reserve, USD mln Social indicators Population, million persons 45,5 45,4 45,4 45,7 45,1 45,6 changes in % versus previous year 99,6 99,7 99,5 99,8 99,5 99,9 Monthly average wage of workers, UAH Disposable income of population, UAH bln Disposable income of population, changes in % versus previous year 9,6 4,8 6,5 12,0 3,6 6,1 29

30 Dynamics Of The Consensus Forecast For 2012 (March 2011 November 2012) Table 10 Indicator March 2011 August 2011 (August 2011 / March 2011) November 2011 (November 2011 / August 2011) April 2012 (April 2012 / November 2011) August 2012 (August 2012/ April 2012) November 2012 (November2012/ August 2012) Real sector, UAH mln. Nominal GDP ,4% ,7% ,6% ,8% ,1% Consumption ,7% ,9% ,0% ,2% ,2% Investments ,9% ,5% ,1% ,5% ,9% Net export of goods and non-factorial services Indexс, year to year Real GDP 105,1 105,4 +0,3 р.р. 104,7-0,7 р.р. 103,2-1,5 р.р. 102,3-0,9 р.р. 101,0-1,3 р.р. Consumption 105,1 106,2 +1,1 р.р. 106, ,6-1,6 р.р. 105,6 +1 р.р. 106,6 +1,0 р.р. Gross accumulation of the fixed capital 110,2 109,8-0,4 р.р. 107,4-2,4 р.р. 104,2-3,2 р.р. 100,4-3,8 р.р. 95,7-4,7 р.р. Exports of goods and services х х х 104,3 х 103,9-0,4 р.р ,9 р.р. 97,8-2,2 р.р. Import of goods and services х х х 111,6 х 106,9-4,7 р.р. 102,9-4,0 р.р. 102,9 0 Inflation, index Consumer price index (annual average) 109,6 109,4-0,2 р.р. 108,9-0,5 р.р. 105,3-3,6 р.р. 103,3-2,0 р.р. 102,3-1,0 р.р. Dec. versus Dec. of the previous year 109,2 108,9-0,3 р.р. 108,6-0,3 р.р. 108,0-0,6 р.р. 105,8-2,2 р.р. 103,6-2,2 р.р. Producer price index (annual average) 113,2 113,7 +0,5 р.р. 113,0-0,7 р.р. 108,6-4,4 р.р. 107,9-0,7 р.р. 105,8-2,1 р.р. Dec. versus Dec. of the previous year 112,7 112,9 +0,2 р.р. 112,4-0,5 р.р. 110,5-1,9 р.р. 109,6-0,9 р.р. 106,1-3,5 р.р. External sector, USD million Current account Exports of goods and services ,6% ,5% ,1% ,9% ,31% Import of goods and services ,9% ,4% ,1% % ,64% Foreign direct investments External sector, % of the GDP Current account -2,34-3,6-1,3 р.р. -4,3-0,7 р.р. -5,3-1,0 р.р. -5,6-0,3 р.р. -6,9-1,3 р.р. Exports of goods and services 48,8 50,8 +2,0 р.р. 52,2 +1,4 р.р. 52,2 0 51,6-0,6 р.р. 51,5-0,1 р.р. 30

31 Indicator March 2011 August 2011 (August 2011 / March 2011) November 2011 (November 2011 / August 2011) April 2012 (April 2012 / November 2011) August 2012 (August 2012/ April 2012) November 2012 (November2012/ August 2012) Import of goods and services -51,7-55,0 +3,3 р.р. -57,0 +2,0 р.р. -57,7 +0,7 р.р. -57,6-0,1 р.р. -58,9-1,3 р.р. Foreign direct investments 3,5 3,5 0 3,3-0,2 р.р. 3,3 0 3,2-0,1 р.р. 3,4 +0,2 р.р. External sector, % year to year (nominal) Exports of goods and services 112,8 114,4 +1,6 р.р. 113,9-0,5 р.р. 110,1-3,8 р.р. 104,7-5,4 р.р. 102,2-2,5 р.р. Import of goods and services 113,0 115,5 +2,5 р.р. 115,1-0,4 р.р. 110,5-4,6 р.р. 105,7-4,8 р.р. 105,3-0,4 р.р. Exchange rate, UAH / USD Average rate 8,03 8,02-0,1% 8,14 +1,5% 8,10-0,5% 8,1 0 8,08-0,3% End of period 8,04 8,08 +0,5% 8,19 +1,3% 8,34 +1,8% 8,38 +0,5% 8,41 +0,4% Consolidated budget, UAH mln All revenues ,9% ,1% ,4% % ,1% All expenditures ,7% ,0% ,5% ,9% ,9% Total balance Privatisation Consolidated budget, % of the GDP All revenues 29,0 29,5 +0,5 р.р. 29,6 +0,1 р.р. 29,7 +0,1 р.р. 30,6 +0,9 р.р. 30,9 +0,3 р.р. All expenditures 31,5 32,2 +0,7 р.р. 31,1-1,1 р.р. 31,8 +0,7 р.р. 32,6 +0,8 р.р. 33,4 +0,8 р.р. Total balance -2,4-2,7-0,3 р.р. -1,5 +1,2 р.р. -2,0-0,5 р.р. -2,1-0,1 р.р. -2,5-0,4 р.р. Privatisation 0,5 0,6 +0,1 р.р. 0,5-0,1 р.р. 0,6 +0,1 р.р. 0,6 0 0,6 0 Money and credit Base money (as of the end of period), UAH mln ,1% ,2% ,5% ,4% ,2% Dec. versus Dec. of the previous year, % 14,1 12,9-1,2 р.р. 10,9-2,0 р.р. 11,2 +0,3 р.р. 11,6 +0,4 р.р. 10,3-1,3 р.р. Money supply (M3) (as of the end of period), ,8% ,2% ,8% ,9% ,6% UAH mln Dec. versus Dec. of the previous year, % 18,4 17,2-1,2 р.р. 16,3-0,9 р.р. 9,2-7,1 р.р. 11,3 +2,1 р.р. 10,6-0,7 р.р. Monthly average wage of workers, UAH ,3% ,2% ,8% ,4% ,3% 31

32 Real sector, UAH mln Indicator Dynamics Of The Consensus Forecast For 2012 (April 2011 November 2012) April 2012 August 2012 ( April 2012/ August 2012) November 2012 Таble11 (November2012/ August 2012) Nominal GDP ,2% ,4% Consumption ,0% ,6% Investments ,1% ,3% Net export of goods and non-factorial services % Gross national savings ,02% ,9% Indexс, year to year Real GDP 104,1 103,6-0,5 р.р. 102,9-0,7 р.р. Consumption 104,7 104,2-0,5 р.р. 103,5-0,7 р.р. Gross accumulation of the fixed capital 105,6 104,7-0,9 р.р. 101,8-2,9 р.р. Exports of goods and services 104,6 104,8 +0,2 р.р. 101,8-3 р.р. Import of goods and services 105,7 106,1 +0,4 р.р. 103,3-2,8 р.р. Inflation, index Consumer price index (annual average) 108,0 107,6-0,4 р.р. 106,9-0,7 р.р. Dec. versus Dec. of the previous year 107,2 107,8 +0,6 р.р. 107,1-0,7 р.р. Producer price index (annual average) 110,8 110,1-0,7 р.р. 109,1-1,0 р.р. Dec. versus Dec. of the previous year 109,7 109,3-0,4 р.р. 108,4-0,9 р.р. External sector, USD million Current account ,0 Exports of goods and services ,4% ,8% Import of goods and services ,9% ,5% Foreign direct investments ,1% ,3% External sector, % of GDP Current account -4,7-5,5-0,8 р.р. -6,3-0,8 р.р. Exports of goods and services 52,0 51,7-0,3 р.р. 53,2 +1,5 р.р. Import of goods and services -56,9-57,5-0,6 р.р. -59,9-2,4 р.р. Foreign direct investments 3,2 3,2 0 3,5 0,3 р.р. External sector, % year to year (nominal) Exports of goods and services 110,9 109,9-1 р.р. 107,5-2,4 р.р. Import of goods and services 109,9 109,5-0,4 р.р. 106,0-3,5 р.р. Exchange rate, UAH / USD Average rate 8,4 8,45 +0,6% 8,55 +1,18% End of period 8,7 8,63-0,8% 8,81 +2,09% Consolidated budget, UAH mln All revenues ,1% ,6% All expenditures ,4% ,9% Total balance Privatisation ,1% ,6% Consolidated budget, % of GDP All revenues 29,7 30,6 +0,9 р.р. 31,6 1,0 р.р. All expenditures 31,3 32,1 +0,8 р.р. 33,3 1,2 р.р. Total balance -1,6-1,4 +0,2-1,7-0,3 р.р. Privatisation 0,6 0,6 0 0,6 0 Money and credit Base money (as of the end of period), UAH mln ,6% ,23% Dec. versus Dec. of the previous year, % 12,2 11,1-1,1 р.р. 10,0-1,10 р.р. Money supply (M3) (as of the end of period), UAH mln ,1% ,4% Dec. versus Dec. of the previous year, % 15,8 14,9-0,9 р.р. 12,8-2,1 р.р. Monthly average wage of workers, UAH ,6% ,5% 32

33 Real sector, UAH mln of consensus forecasts for 2012 and 2013 (as of November 2012) Indicator Consensus forecast for 2012 as of November 2012 Consensus forecast for 2013 as of November 2012 Таble 12 (2013 / 2012) Nominal GDP ,2% Consumption ,5% Investments ,6% Net export of goods and non-factorial services Gross national savings ,6% Indexс, year to year Real GDP 101,0 102,9 +1,9 р.р. Consumption 106,6 103,5-3,1 р.р. Gross accumulation of the fixed capital 95,7 101,8 +6,1 р.р. Exports of goods and services 97,8 101,8 +4 р.р. Import of goods and services 102,9 103,3 +0,4 р.р. Inflation, index Consumer price index (annual average) 102,3 106,9 +4,6 р.р. Dec. versus Dec. of the previous year 103,6 107,1 +3,5 р.р. Producer price index (annual average) 105,8 109,1 +3,3 р.р. Dec. versus Dec. of the previous year 106,1 108,4 +2,3 р.р. External sector, USD million Current account Exports of goods and services ,8% Import of goods and services ,0% Foreign direct investments ,7% External sector, % of GDP Current account -6,9-6,3 +0,6 р.р. Exports of goods and services 51,5 53,2 +1,7 р.р. Import of goods and services -58,9-59,9-1 р.р. Foreign direct investments 3,4 3,5 +0,1 р.р. External sector, % year to year (nominal) Exports of goods and services 102,2 107,5 +5,3 р.р. Import of goods and services 105,3 106,0 +0,7 р.р. Exchange rate, UAH / USD Average rate 8,08 8,55 +5,8% End of period 8,41 8,81 +4,8% Consolidated budget, UAH mln All revenues ,7% All expenditures ,9% Total balance Privatisation ,1% Consolidated budget, % of GDP All revenues 30,9 31,6 +0,7 р.р. All expenditures 33,4 33,3-0,1 р.р. Total balance -2,5-1,7-0,8 р.р. Privatisation 0,6 0,6 0 Money and credit Base money (as of the end of period), UAH mln ,0% Dec. versus Dec. of the previous year, % 10,3 10,0-0,3 р.р. Money supply (M3) (as of the end of period), UAH mln ,8% Dec. versus Dec. of the previous year, % 10,6 12,8 +2,2 р.р. Average wage of workers, UAH ,3% 33

34 Real sector Indicator Consensus forecasts for (as of November 2012) Average MIN MAX Таble 13 Nominal GDP, UAH mln Actual GDP, index, year to year 103,9 103,0 105,0 Inflation Consumer price index (annual average) 106,2 105,1 107,2 Producer price index (annual average) 107,4 105,4 110,0 External sector USD mln Current account Exports of goods and services Imports of goods and services Foreign direct investments External sector % of GDP Current account -5,3-7,8-3,4 Exports of goods and services 51,6 42,3 59,0 Imports of goods and services -57,1-82,0-46,5 Foreign direct investments 3,6 2,8 16,0 External sector % year to year (nominal) Exports of goods and services 111,2 107,6 117,4 Imports of goods and services 109,3 106,7 115,0 Rate of exchange, UAH/USD Average 8,64 8,5 8,8 End of period 8,90 8,5 9,5 Consolidated budget % of GDP All revenues 30,5 28,5 31,0 All expenditures 31,7 29,5 32,4 Total balance -1,2-1,4-1,0 Privatisation х х х Money and credit Base money (as of the end of period), UAH mln Dec. versus Dec. of the previous year, % 11,4 6,0 17,8 Money Supply (M3) (as of the end of period), UAH mln Dec. versus Dec. of the previous year, % 13,9 10,0 24,1 NBU gross international reserves, USD mln Social indicators Population, million persons 45,1 44,8 45,4 Monthly average wage of workers, UAH

35 Methodological explanations to Tables 2, 3, 9, 10, 11,12 and 13: The aggregated nominal values were calculated as a simple averaged value of the sum of the relevant indicators presented by all the forecasting organizations that participated in the Consensus Forecast survey. In order to equalize the averaged (consensus) figures of the aggregated nominal values with the sum of their components, the averaged values of structural indicators (such as, for example, consumption and investments) were calculated indirectly with the help of parts of these components in the aggregated value. For example, if an average weight of consumption in GDP is known, then a nominal value of consumption is equal to the sum of this weight and the value of the averaged consensus GDP calculated as a simple average. Indexes were calculated as a simple average of the sum of the relevant indicators presented by all the organizations. The average values of the indicators being forecasted as percentage of GDP (particularly, indicators of the external sector and budget) were calculated as a ratio of the averaged nominal value of the indicator to the relevant average GDP value. The indicators forecasted in US dollars were calculated as a percentage of GDP on the base of averaged annual exchange rate. Growth rates of the monetary aggregates within the forecast for 2012 (as of November 2012) were calculated as the ratio of the simple averaged nominal value from individual forecasted indicators presented by the participants to the actual value of the relevant indicator for 2011, and for 2013 as the ratio of the simple averaged nominal value from individual forecasted indicators presented by the participants to the relevant forecasted indicator for Average values of the current account balance were calculated as the sum of average values of the items of the account. Average values of budget deficit / surplus were calculated as a difference between the average values of revenues and expenditures. During preparation of the consensus forecast, the organizations attending the seminar provided the following materials: forecast assumptions regarding an economic policy to be pursued in , and some quantitative exogenous parameters of development (presented in Table 4); forecast of the main macroeconomic indicators for 2012 and 2013; additional text explanations given by some organizations regarding forecast assumptions; expert assessment of risks for (presented in Table 5, 6, 7 and 8). 35