Page 42 - Eastern Europe Outlook 2020
P. 42

      IMF GDP forecast
   2.99
   3.011
  3.19
     Goldman Sachs forecast
    2.7
    2.6
   -
     NBU forecast
    3.5
    3.5
   4
     EBRD
    3.3
    3.5
    S&P
     3.2
      3
     3
   World Bank forecast
  3.6
   3.7
  4.2
    source: bne IntellINews
             ● GDP
Ukraine’s economy emerged from recession in 2016, following an almost total collapse the year before, and was growing by more than 4% in 2019. However, this growth rate is still below potential as growth is stymied by the war with Russia and the lack of investment by the leading companies.
Ukraine's GDP ​grew by 4.1% y/y​ in July-September, which is higher than expected by the nation's central bank, but was slower than the previous quarter. According to the state statistics service Ukrstat, the growth rate stood at 4.6% y/y in the second quarter, at 2.5% y/y in the first quarter.
Growth was slowing in the third quarter as consumption cools. Ukraine’s real GDP rose 4.1% y/y in 3Q19, or 0.6% q/q on a seasonally adjusted basis, to UAH1,405bn ($43.8bn), mostly due to weaker real growth of private consumption, which advanced 8.5% y/y, slowing from 11.8% y/y in 2Q19.
“It looks like private consumption growth, which is Ukraine's main economic driver, has started cooling. Meanwhile, the negative contribution of net exports to GDP softened in 3Q19, as real export growth significantly outpaced the growth of imports,” Evgeniya Akhtyrko of Concorde Capital said in a note.
On the production side, weaker GDP growth in 3Q19 was mostly due to slower value-added growth in agriculture (6.0% y/y in 3Q19 vs. 7.3% y/y in 2Q19) and a decline in manufacturing of 0.4% y/y (vs. 0.8% y/y growth in 2Q19).
The value-added in construction continued to grow fast, advancing to 20.6% y/y (vs. 20.5% y/y in 2Q19). The GDP deflator declined to 6.8% in 2Q19 (3Q19?) from 9.4% in 2Q19.
A post collapse rebound suggests that the economy could be growing a lot faster and indeed growth slowed somewhat in the third quarter of 2019 and the full year result is expected to be just under 3%.
That number is important as if the economy grows by more than 3% and its value is over $125bn (which it is) then Ukraine’s warrant payments to bondholders that were offered as part of former finance minister Natalie Jaresko’s debt restructuring deal in 2014 will kick in. However, if economic growth is only just over 3%​ ​the payments will be minimal​; the warrants only get expensive if growth goes over 4%.
   42​ EASTERN EUROPE Outlook 2020​ ​ ​www.intellinews.com
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