It can be said that in March there was a slight improvement in the economic data. China’s plans to reduce risks in the financial system are put on the back burner, loans continue to grow rapidly, and the Communist Party now also adds fiscal stimulus by reducing taxes. As a result, the economy accelerated again, industrial production accelerated, the stock market also grew significantly, in particular, the Shanghai CSI 300 index added 5.5%. In the US, GDP growth in the last quarter of 2018 was revised down to 2.2%, but some of the leading indicators also indicate a likely acceleration in the first quarter of 2019, the S & P 500 index added 1.8% over the month and came up to historical highs again. Although for most economies, the first quarter was likely to be quite good, analysts both for this year and the next continue to forecast a decline in economic growth. For example, the IMF in each of its three recent reviews of the world economy lowered its forecast - now it is 3.3% of world GDP growth for 2019. In Ukraine, the main event remains the election, where comedian Zelensky won an impressive victory in the first round of the presidential election. The reaction of financial markets is neutral-positive, prices for Ukrainian Eurobonds have slightly increased, but this is more a reaction to transparent fair elections than to Zelensky’s victory.
It looks like the current president’s chances of winning the second round tend to zero, since the majority of voters of candidates such as Boyko and Tymoshenko will also vote for Zelensky, and it’s worth reconciling to the fact that the president will be a showman without political experience. It is noteworthy that so far nothing is known about the team or the candidate’s program, because it is difficult to somehow predict his decisions. The next report will be clear to the team and the program of the first actions, then we will comment on the details. In the meantime, our forecasts do not change: the course of reforms required by the IMF for tranches will continue. Ukraine is waiting for a moderate economic growth, which has chances to accelerate next year. Probably, after the second round of elections, the NBU will lower the discount rate. Well, the external background in the financial markets is improving.
