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Macroeconomic News


UPDATE 1-Ukraine PM sticks to '09 growth forecast

Thu, 5th Feb 2009 11:11


KIEV, Feb 5 (Reuters) - Ukrainian Prime Minister Yulia Tymoshenko stuck to
her government's 2009 growth forecast of 0.4 percent on Thursday, rejecting predictions from other officials and international bodies that the economy will contract.

Tymoshenko was presenting her government's plans to parliament in a debate to be followed later in the day by a confidence vote. Her government is underpinned by a coalition of three groups whose strength is so far untested in the chamber.

'Ukraine plans for 0.4 percent growth in gross domestic product in 2009, whereas the IMF proposed a forecast of minus five percent,' Tymoshenko told the chamber.

'The government did not agree with such a forecast. It is simply too easy to become reconciled to a fall. I believe Ukraine is strong, with resources and reserves and if the proper actions are taken at this difficult time, we can achieve this indicator as planned.'

Ukraine has been battered by the global financial crisis as demand drops for its chemical and steel exports. Industrial output dropped 20-30 percent year-on-year at the end of 2008.

An International Monetary Fund mission has been in Kiev for the past two weeks to examine government policies and determine whether to release the second tranche of a $16.4 billion loan.

Tymoshenko, long at odds with President Viktor Yushchenko, her liberal former ally, said that if her government survived the confidence vote, she would proceed next week with a cabinet shuffle. Parliament must approve all cabinet changes.

Yushchenko has urged the prime minister to alter the budget, saying many figures are unrealistic.

The prime minister also said the government was forecasting inflation of 9.5 percent, subject to movements by the hryvnia currency, against 22.3 percent recorded in 2008.

'Such a hope is based on producer price indexes which have dropped considerably,' she told deputies. 'All conditions are there for a decline in consumer prices, but we cannot achieve that unless the hryvnia/dollar rate is settled.'

She repeated her contention that the hyrvnia, which fell sharply at the end of last year, should stand at 6-6.5 to the dollar. The hryvnia, supported by central bank interventions, currently trades at just below 8 to the U.S. currency.

(writing by Ron Popeski; Editing by Victoria Main) Keywords: UKRAINE ECONOMY/PM

(Kiev bureau; +380 44 244 9150 Reuters Messaging:ronald.popeski@reuters.com@reuters.net)

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