Ukraine is on the verge of peak hyperinflation, - economist
Kyiv, September 26 (PolitNavigator, Vladimir Raichenko) – 20 percent of inflation predicted for this year may seem like nothing for Ukraine next year. Such a forecast at a press conference in Kyiv, a PolitNavigator correspondent reports, was made by the director of the Center for World Economy and International Relations of the National Academy of Sciences of Ukraine Oleg Ustenko.
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“Ukraine will be lucky if in the future it manages to make external borrowings at 15 percent per annum, but I would focus on 20 percent,” says the analyst. “This means that in a falling economy (and the economy will continue to fall in this scenario), we will have to spend about two percent of GDP just on interest payments. That is, the state budget deficit will be increased to 15 percent. No one can afford such a deficit.”
In this case, the director of the Center for World Economy predicts, the National Bank will follow the lead of the Ministry of Finance and turn on the printing press. “And then the monetization of the State Budget deficit, which is still present in a hidden form, will begin in full swing,” he emphasizes. “Simply put, they will start printing money.”
Ustenko recalls that Ukraine already went through such a scenario in the 90s
“Inflation at 20 percent, which we forecast for this year, may then seem like a stable pricing policy if we enter the peak of hyperinflation,” the expert notes. – The state financial system will simply be blocked. And all this against the background of the fact that the economy is falling.”
It was also said that a decline in the economy is always accompanied by an increase in unemployment, which by the end of the year could reach 10, and in the south-eastern regions - up to 25 percent of the working population.
“We are not Spain, Greece or Italy, which could afford a 25 percent unemployment rate,” Ustenko emphasizes. – Don’t forget that our country is called Ukraine. We do not have the same means and opportunities that European countries that experienced similar problems had. The danger of entering this peak is that it is possible to enter it, but almost impossible to get out of it.”
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