• 23/06/2024 01:30

The analyst explained why low inflation is dangerous for the Ukrainian economy

ByJohn Newman

Apr 27, 2024

Not long ago, the bank-regulator informed that since March, the rate of consumer inflation in annual terms has fallen to 3.2 percent, and the level of the identical basic indicator “year-on-year” did not exceed 4.2 percent.

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The analyst explained why low inflation is dangerous for the Ukrainian economy

Photo – 24tv.ua

About the fact that the reduced level of inflation during the war, fluctuating in the range from 3 to 4 percent, is a sign of not an improvement in the economic sphere, but a continuation of the processes of stagnation in it, writes NBN, citing opinion of the head of the analytical department of the ANTS Network for the Protection of National Interests, Ilya Neskhodovsky, published by Ukrinform.

According to Neskhodovsky, low inflation rates in the context of increased risks only slow down the prospects for any economic growth. In particular, until recently, the NBU kept the discount rate at 14.5 percent, maintaining high returns on its certificates of deposit, which dealt a blow to lending to the country’s economic sector.

For example, business there was nowhere to get funds, since the factors described above did not allow lending to work at the proper level, and the volume of domestic investment was exhausted, and all this despite the fact that “state programs are limited, and external investment is impossible.”

The way out of such a situation, according to the analyst, could be not only a sharp reduction by the National Bank of the discount rate (already 13.5 percent), but also a complete rejection of artificially curbing the rate of inflation with a certain control over the growth of its peak values.

Earlier, we wrote about that the NBU explained the reasons for the slowdown in inflation in the spring.

nbnews.com.ua

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