OREANDA-NEWS. The NBU keeps its headline inflation projection unchanged at 12% by the end of 2016 and 8% by the end of 2017 despite the fact  that the slowdown of inflation in the first quarter of 2016 proceeded faster than it was projected in January 2016. Such projections are in consistent with the NBU’s monetary policy objectives, reads the April 2016 Inflation Report. 

The NBU has decided to leave the forecast unchanged primarily because most factors driving inflation rapidly down in January-March 2016 were short-lived and their effect would unwind in the periods ahead. A return of inflation to the target will also be fostered by rising global commodity prices.

Ukraine’s economy is expected to return to growth in 2016. According to the NBU’s estimates, in the first quarter of 2016 real GDP posted a modest  increase  in annual terms. The NBU deems it appropriate to keep the forecast for annual real GDP growth unchanged at 1.1% in 2016. Although the external assumptions, regarding global commodity prices, were improved, their impact can be leveled by worsened business expectations and investors’ sentiment amid  delays with  the resumption of cooperation with the IMF.

The outlined projections are reflected in the baseline forecast scenario, which is the most likely to occur. The baseline scenario rests on the assumption that the situation in the east of the country won’t deteriorate, Ukraine will continue cooperation with the International Monetary Fund and global commodity prices will keep growing over the forecast horizon.

The Inflation Report reflects the opinion of the National Bank of Ukraine as to the current and future economic state of Ukraine with a focus on inflationary developments, which are the input for monetary policy decision-making. The National Bank of Ukraine publishes the Inflation Report on a quarterly basis, starting from April 2015.