Over the past month, little has changed. In the markets, the second month continues the phase of relative calm, since the main irritants, such as Brexit and the US-Chinese trade war, did not generate significant news. It is worth noting the deterioration in the economic expectations of the ECB, which has already led to claims that low rates in Europe will continue at least until the end of the year, as well as to the resumption of the LTRO program (the ECB provides cheap financing to European banks against government bonds). In other words, after the US Federal Reserve, the ECB also eased some monetary policy, and this, of course, also supported the markets, in particular, the S & P 500 index added 3% over the month. In the Ukrainian financial market we continue to state the growth in the supply of currency over demand and the growth of the hryvnia exchange rate, despite the uncertainty surrounding the elections.
Less than a month remains before the first round of presidential elections, but uncertainty only increases. If earlier there were 3 realistic applicants, then now we can say that there are already four of them - after the unification of Sadovy and Gritsenko and a series of sensational corruption investigations, which probably lowered Poroshenko’s rating somewhat. Perhaps, with a high degree of confidence, we can say that there will be a second round and Zelensky will be in it, but who can compete with him, and who will win the elections in the end, is not yet possible to say. Although the external background in financial markets has significantly improved in two months, we will again emphasize that this is not enough for the future president to have more freedom of political maneuver. All the same, you need to finance the budget deficit and service external debts, and therefore you cannot escape from cooperation with official creditors such as the IMF. Therefore, we will have to continue the course of reforms that our partners insist on. By the next our report, probably, there will be clarity about the results of the first round, and perhaps we will update our expectations about the economy and the stock market of Ukraine. In the meantime, we still expect moderate economic growth this year, lower interest rates and acceleration of the economy as political uncertainty is resolved.
