Page 47 - Eastern Europe Outlook 2020

y/y growth in August, the nation's state statistics service Ukrstat reported on October 28.
The average monthly nominal wage amounted to UAH10,687 a month, increasing from UAH10,527 in August, or 0.7% m/m in real terms. Wages are expected to continue to recover in 2020 depending on the pace of economic growth.
The consumer debt profiles of Russia and Ukraine are very different. Russia’s household debt had risen to 15.5% of GDP as of the end of 2018 and is just shy of its all time high of 15.6% set in 2014. Ukraine’s household debt has been falling steadily from its all time high of 28.3% set in 2008 and is now around 5%, according to official figures, setting the economy up for a consumer credit driven retail boom in future.
There is a big difference too in the dollar values of the debt. Russia’s per capita household debt has increased by $336 in the last year to $1,954 per capita as of September 2019, which is slightly more than the equivalent of two months salary.
Ukraine’s per capital household debt has also crept up in the last year, but only by a modest $30 to $204 per capita, which is slightly more than half a month’s salary.
While Ukraine’s banks have not yet turned to the retail business as a main source of business, with real wages growing by 9.8% in September and retail turnover growth of 8.6% in the same month, clearly the conditions for a sustained boom are in place.
Ukraine's unemployment started to fall more noticeably in the second quarter of 2019. The unemployment level fell from 9.2% in the first quarter to 7.8% in the second.
Part of the reason for the fall is the improving economy and more job creation, but more negatively the mass emigration of the workforce to Ukraine’s neighbours that simply means there are not enough workers at home is also driving down unemployment at home.
Unemployment is an issue for the new government, which has introduced new investment and liberalised labour laws that are designed to create 1mn legal jobs and to cut the unemployment rate to 5% in the nearest future — in line with Poland, Romania and Moldova.
Due to a combination of economic growth and labour migration, Ukraine’s unemployment, as measured by the State Statistics Service, has fallen from 9.9% in 2017, to 8.8% in 2018, to 7.8% in the second quarter of 2019 and is expected to fall further in 2020.
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