Ukrainian deputy PM cuts growth forecast, cites trade blockade …
(Adds inflation forecast, background) KIEV, May 31 (Reuters) - Ukrainian Deputy Prime MinisterStepan Kubiv cut the government's 2017 economic growth forecastto 1.8 percent from 3 percent on Wednesday, citing a tradeblockade with separatist-held territories as one of the driversfor the revision. The new forecast is just below the central bank's revisedprediction of 1.9 percent. Kubiv said growth for 2018 wouldlikely climb to 3 percent, and to 3.6 percent in 2019.
Since the start of the year, a blockade on rail freight fromrebel-held eastern areas has prevented coal supplies fromreaching Ukrainian power plants and the steel industry, whoseexports are a keystone of the economy. [nL5N1GF55J] "The adjustment is based on ... a change in forecast pricedynamics for key Ukrainian export goods, the halt in cargotransport across the demarcation line within Luhansk and Donetskregions and also the adjusted IMF (International Monetary Fund)development forecasts for different countries of the world,"Kubiv said at a government meeting. The central bank warned in March that the blockade couldnearly halve growth in 2017. In its new economic forecasts, the government sees year-endinflation at 11.2 percent year-on-year, higher than the previousforecast of 8.1 percent.
Last Thursday the central bank, which expects inflation of9.1 percent this year, warned that consumer prices could bedriven rise above forecasts if the government did not stick to a"prudent" fiscal policy.
The central bank has not ruled out tightening monetarypolicy if proposed pension increases under a reform backed bythe IMF push up consumer demand in the short-term. [nL8N1IR33J] (Reporting by Natalia Zinets; writing by Matthias Williams andAlessandra Prentice; Editing by Raissa Kasolowsky) (([email protected];))Keywords: UKRAINE GDP/ (UPDATE 1)