Compared to previous crisis episodes, Ukraine joined the world economic crisis caused by the spread of the coronavirus COVID-19, with a large margin of safety.
As the Wave passes, this is stated in the “Inflation report” of the NBU.
According to the report, in 2020 the depth and duration of economic decline is not determined by macroeconomic imbalances, and restrictions of economic activities. In this regard, it is expected and faster recovery after the lifting of the quarantine.
It is noted that the current macroeconomic conditions indicate the possibility of overcoming the recession with smaller losses than in previous recessions, accompanied by currency and banking crises.
The national Bank also noted that Ukraine, due to consistent monetary policy for the first time is in crisis with moderate inflation and low inflation expectations, which gives the space for monetary easing.
In addition to this, liberalization of the foreign exchange market and the transition to flexible exchange rate helped to avoid accumulation of currency imbalances. It is emphasized that in contrast to 2008 and 2014, the current account deficit is within the acceptable limits, which is a Testament to the fact that the hryvnia exchange rate is close to equilibrium.
Also according to the NBU, the implementation of the Strategy of foreign exchange intervention gave the opportunity to build sufficient international reserves to meet obligations and also smooth out excessive volatility in the foreign exchange market.
It is noted that the reduction of the debt burden gives the government the opportunity to increase the budget deficit to give the economy a fiscal stimulus. Now, in contrast to previous crises, when due to the growth of the debt was covered by gaps in the balance of “Naftogaz” or recapitalize troubled banks, funds can be sent directly to the support of the population and business.
“The banking sector, which was previously a catalyst of crises, now transparent and profitable, and capital significantly exceeds the minimum level,” — says the national Bank.