Fitch affirms rating of Ukraine
The international rating agency Fitch has worsened the forecast for GDP growth in Ukraine in 2017 from 2.5% to 2% and confirmed the long-term issuer default rating of Ukraine in foreign currency at the B-
“Ukraine’s GDP grew by 2.3% in 2016, which exceeded expectations, but the blockade will have a negative impact on the mining, metallurgy and electricity sectors, and we expect that growth in 2017 will slow to 2%,” Fitch said.
The agency predicts that in 2018, GDP growth could reach 3% due to improved consumer demand and investment.
Average inflation is projected to decrease to 11.2% in 2017, compared to 14.9% in 2016 (according to Gosstat, in 2016 consumer prices rose by 12.4%).
Fitch also confirmed the long-term issuer default rating of Ukraine in foreign currency at the B- level.
According to the Fitch scale, the ratings of group “B” mean the existence of certain credit risks with a limited margin of safety.
“In the ratings of Ukraine there is weak liquidity, high debt burden and structural weaknesses associated with weak banking sector, institutional constraints, geopolitical and political risks,” the report said.
The agency notes that the international reserves of the National Bank increased to $ 16.7 billion after transferring tranches from the International Monetary Fund ($ 1 billion) and the European Commission (macro-financial assistance from the EU 600 million euros).
Fitch believes that by the end of 2017, the international reserves may increase to 18.1 billion dollars.
“The continuation of the IMF program is positive for Ukraine’s credit profile, because it supports external financing, supports confidence and provides the impetus for reforms, but further payments from the IMF and other international partners will depend on progress in implementing the structural reform program … Key indicators of reforms include Pension reform, the introduction of the land market, privatization and progress in fighting corruption, “the agency concludes.
Recall, the International Monetary Fund predicts the growth of Ukraine’s GDP at 2% with inflation of 10% at the end of 2017.