Time to reduce costs

World Bank (WB), the recession worsened the prognosis of GDP of Ukraine in 2009 to 15%. His decision to experts explain the bank's deteriorating global economic environment. Thus, according to a recent World Bank report Global Development Finance, global GDP in 2009 decline by 2.9% drop in world trade at 9,7%.

projected to decline in Eastern Europe and Central Asia will be 4.7% (2.7 point deterioration in the forecast on the March). According to experts, adaptation to new conditions in Eastern Europe, particularly because of the failure of export demand and rapidly stop tide of capital, the supply of domestic demand in the region during the pre-years.

In accordance with the conditions of external markets and the development of domestic economic policies, we expect the fall in GDP of Ukraine by 15% in 2009, followed in 2010 to begin a slow recovery, - says in a report the World Bank in Ukraine. But after 2010 the GDP of Ukraine is expected to grow annually by 3-4%, predicts the World Bank senior economist in Ukraine Ruslan Piontkovsky.

However, the experts we have improved the bank's inflation forecast - up to 13.4%. At a time when investment demand and imports dropped sharply in the early stage of crisis, we expect further correction in consumption during the year, because the labor market remains weak, and savings of households are running dry. Since substantial output gap makes possible a more rapid disinflation in the moment, we foresee the growth of consumer prices to 13.4% during 2009 , - says the report.

However, even modest prospects in 2009 and exceeding the forecast of 2010 require sound economic policies, which would reduce the cost of borrowing and to support the volume of refinancing the debt, like bank experts.

According to a leading economist of the World Bank in Ukraine, Pablo Saavedra, balanced management of public finances will be the main challenge of macroeconomic policy. Because the state budget for 2010 will be the most critical budget for Ukraine, he forecast the other day at a press conference.

According to Saavedra, the World Bank is waiting for September to review the draft document. It is important that it be fiscally balanced, structured so as to support economic growth. The future of Ukraine will depend on reforms and an adequate budget for 2010 - adding a leading economist of the World Bank in Ukraine.

Saavedra advised the Ukrainian government to reconsider its policy regarding the expenditure budget, which he considers the main problem of Ukraine. Therefore, according to an economist, any increase in the minimum wage and living wage yet there can be no … Ukraine can not now allow such things … This would increase the budget deficit at 3-4% of GDP. They will not fund! - He said.
Instead

is seriously imbalance of the pension system and the energy sector, believe in the WB. These structural deficits must be addressed, and the subsidies and social programs neadresnye - reform, which in turn will create fiscal space for needed investment, - the report of the bank. - Increasing rates of energy must be accompanied by reforms of tariffs and the establishment of a mechanism of meeting payments teplosnabzhayuschih companies at the local level.

Economic recovery needs structural reforms to raise productivity, like the World Bank. Therefore, the growth prospects of economy of Ukraine in 2010 and the medium term is largely dependent on its wealth to increase productivity by eliminating the regulatory barriers to entry into the business, reducing regulatory transactioncosts, promoting fair competition and a demonstration of political will for reform in the energy sector (eg, tariff reform and management reform Naftogaz) and the public sector (government procurement, the judiciary, public administration and management of public enterprises), experts believe the bank. According to Pablo Saavedra, now is the time for these reforms.

Alex Savitsky

For quotations on the world currency ruble segment to continue to be submitted during a particular exchange rate stabilization
Today, the RTS Index is an opportunity to get to the level of 1010 points
As leaders of the rising movement of today may be shares of oil and gas companies
Today, expect short-term market correction of EUR /USD up
Management CIT Group presented a surprise
In the main currency tandem immediate goal - the level of 1.4140 dollars per euro
Overview of the foreign exchange market for 22.07.09
Goskomstat: the Ukrainian operators in the I half of revenues decreased to 2.7%
Exorcist market