Erste Cuts Ukraine’s 2013 GDP-Growth Forecast to 1.5% From 3%

Erste Group Bank AG cut its forecast for Ukraine’s 2013 economic growth to 1.5 percent from 3 percent as steel exports fall and domestic consumption stagnates.

Inflation will probably reach 14 percent this year, while the budget deficit will be 2 percent of gross domestic product, Erste predicted.

This year will be “especially difficult” for the economy, analyst Igor Zholonkivskyi wrote today in an e-mailed note from Kiev, the capital. Difficulties in the steel industry are “piling up, pressure on the hryvnia is increasing and foreign liquidity is worsening.”

Ukraine’s government plans to boost domestic consumption to spur economic growth as global demand declines for metals, the former Soviet republic’s primary export. GDP shrank 1.3 percent from a year earlier in the third quarter, with industrial production plunging 7.6 percent in December.