Page 5 - bne IntelliNews Country Report: Ukraine Dec17

1.0 Executive summary
Ukraine's real GDP grew 2.1% year-on-year in July-September, the Ukrstat state statistics agency reports which while encouraging is still well under potential.
The population are still mired in misery after incomes have fallen by 36% since the Maidan protests in 2014. While consumption is starting to recover its is from a low base.
Ukraine's real GDP grew 2.3% y/y across April-June , according to official data. In the first quarter, Ukraine's GDP grew by 2.5% y/y. Ukraine's economy grew 2.3% y/y in 2016 owing to booming investments in fixed assets (20.1% y/y growth) and reviving private consumption (1.8% y/y).
The National Bank of Ukraine (NBU) has revised its economic forecast for this year upward from 1.6% y/y to 2.2% y/y saying that the nation's economic growth in 2017 will be stronger than expected. This was the result of a more favourable than expected effect from both internal and external factors on the economic performance of most sectors in the second and the third quarters of the year. High commodity prices, especially steel prices, added to revenues.
Ukraine’s economy is approaching the end of 2017 at low power, with growth still hindered by the consequences of the crisis. Household and business sentiment is starting to improve, but it remains far from clearly optimistic.
Despite material progress in areas like pension reform, the government has frozen other key initiatives, making a near-term resumption of lending under the IMF program highly unlikely.
Still, key macro indicators show the economy balancing well. The exchange rate is fluctuating in a reasonable range of less than 5%, with minimal involvement from the NBU. The C/A deficit is tracking below 4% of GDP for the 4th consecutive year and inflows via the financial account are also healthy
Growth remains uneven across economic sectors – agriculture and industrial production are drifting around zero, while construction (+23.8% y/y in 9M17) and retail trade (+8.6%) are recovering robustly.
Adverse weather conditions earlier this year affected the agriculture sector and total output is expected slightly below last year’s record.
Industry is being held back by several factors, including the lingering effects of the suspension of trade with the non-controlled territories in eastern Ukraine and the lower supply of agricultural inputs for the food industry.
Private household demand and investment demand are gaining strength and will remain key growth drivers in the years to come.
Real exports will be virtually unchanged y/y in 2017, but may contribute to economic growth next year. SP Advisors forecast real GDP growing 2.2% this year and accelerating to 3.5%-4.0% in 2018 as the post-crisis wounds heal.
5 UKRAINE Country Report December 2017 www.intellinews.com