Page 22 - UKRRptDec18

situation is in line with the forecasts of the government and international partners,” the State Statistics Service noted in a release on the government’s website.
The National Bank of Ukraine at the beginning of November estimated GDP growth in the third quarter at 3.1%, and kept the full year forecast at 3.4%. Next year the NBU also expects growth to slow to 2.5%, before accelerating again to 2.9% in in 2020.
The national budget for 2018 and the draft national budget for 2019 are built on the forecast of economic growth in these years by 3% annually.
All these forecasts predict growth that is well below Ukraine’s economic potential. A number of factors, including the war with Russia in the eastern regions, political uncertainty ahead of the key 2019 elections and the government’s failure to implement sweeping reforms are holding back a faster pace of growth.
Economic growth remains robust at above 3%
GDP growth has been robust, but the 2H will be softer than 2Q’s 3.8% y/y increase, which was driven largely by an early harvest.
Growth remains uneven – industrial production has dipped back to negative territory y/y since July after the subtle growth of 1H. Weakness in external markets and transportation problems are among the factors at play.
Meanwhile, domestic-oriented sectors are growing at a healthy pace – in particular, retail sales continue to grow more than 5% y/y in real terms. Private household demand will remain the key growth driver in the near term; however, imports will cover much of that demand.
FY GDP growth is close to delivering our projection of 3.4%. We continue to expect a material deceleration next year on the back of tighter fiscal policy and election-related uncertainty.
22 UKRAINE Country Report December 2018 www.intellinews.com