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The growth of Ukraine’s economy lags behind potential rate

Рост экономики Украины отстает от потенциальных темповThe IMF has called the lack of growth of the Ukrainian economy.

Ukraine’s economy is growing slower than it could. While it lags behind the more rapid growth of gross domestic product (GDP) of developing countries of Europe.

This was stated by the permanent representative of the International monetary Fund (IMF) in Ukraine Jost Longman.

“Of course, economic growth of 3% a year better than a 10% reduction, which Ukraine has undergone in 2015. But if you look in the context of developing countries of Europe are now growing on average by 4-5% a year, that speaks about insufficiently fast recovery of Ukraine”, – he said.

Ukraine needs to achieve higher growth rates to recover after the recession in 2014-2015, said the IMF representative.

According to the IMF, one of the essential factors of economic backwardness of Ukraine is corruption, which annually “eats” about 2% GDP growth.

“If the level of corruption in Ukraine was reduced to an average level among European countries, real GDP growth amounted to 3% and 5%. Moreover, it would have changed the growth potential”, – said Longman.

At the same time, he added, not less important task is to maintain the current growth rate of the economy, and it’s important to eat a balanced fiscal policy to reduce inflation, as the conditions for lower interest rates, expansion of foreign direct investment (FDI).

“We see that the macroeconomic situation is slowly stabiliziruemost. But this stability is still fragile: market participants continue to worry what would happen if the financial stability will be lost,” he explained.

Speaking about high inflation and interest rates, Ljungman reported that they constrain domestic investment. “The level of interest rates is currently more than 18% per annum. It is obvious that under such conditions it is difficult to Finance investment through borrowing in the Bank. Solution to this problem is the reduction of inflation,” he said.

The representative of IMF said that the Fund predicts slower growth of consumer prices by the end of next year to 6.2% on the back of tight monetary policy of the National Bank, and weakening inflationary expectations among the population.

At the same time, he noted the importance of promoting the NBU in this issue by the Cabinet of Ministers to his fiscal policy contributed to low stable inflation.

Regarding foreign investment, Longan noted the need to improve the business climate and the level of property rights protection. “If you want to investors have invested in the Ukrainian economy money for 18-20 years, they want to be sure that they will be treated fair,” he said.

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