wiiw Forecast Reports
UKRAINE: Teetering on the brink
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in: Investment to the Rescue
wiiw Forecast Report No. Spring 2014, March 2014 , pp. 105-107
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UKRAINE
The severe political crisis and the suspension of Russian credits have put the currency under strong downward pressure, prompting the National Bank to switch to a floating exchange rate regime and impose partial capital controls. The near-term economic prospects are hardly encouraging, with a balance-of-payments crisis and a bank run looming on the horizon. A ‘rescue package’ from the IMF is urgently needed to prevent this scenario. However, the ‘austerity’ conditionalities, which will likely be attached to such a package, will almost certainly push the economy into recession this year.
The severe political crisis and the suspension of Russian credits have put the currency under strong downward pressure, prompting the National Bank to switch to a floating exchange rate regime and impose partial capital controls. The near-term economic prospects are hardly encouraging, with a balance-of-payments crisis and a bank run looming on the horizon. A ‘rescue package’ from the IMF is urgently needed to prevent this scenario. However, the ‘austerity’ conditionalities, which will likely be attached to such a package, will almost certainly push the economy into recession this year.
Reference to wiiw databases: wiiw Annual Database, wiiw Monthly Database
Countries covered: Ukraine