Page 4 - UKRRptFeb20
P. 4
1.0 Executive summary
Ukraine’s economy is growing but it underperformed in 2019 with growth slowing to circa 2.8% form 3.3% in 2018. The growth in 2019 was just below the 3% threshold to trigger the first payments on the country’s GDP warrants.
However, the forecast for 2020 is better with the official growth estimate at 3.7% and the government still talking about lifting growth to 5-7% in the next four years thanks to the hectic legislative programme that Ukrainian president Volodymyr Zelenskiy launched on his just day on the job last summer. While most of the attention has been on the president’s meeting with Russian President Vladimir Putin and the shenanigans of oligarch Ihor Kolomoisky who is attempting take back his Privatbank, on-the-ground the government has been pushing through one reform after another.
Below is a rundown of some of the main results and while the economy clearly lost steam in the last quarter the one result that stands out is the rise in real incomes that has fed through into retail turnover. Consumption is an economic driver and can start the virtuous circle of spending, growth, profit, investment, rising wages which is what drove much of Russia’s rapid catch up growth in the noughties.
Industrial output shrank 7.7% y/y in December versus a fall of 7.5% in November (and was down 1.8% in 2019). This was mainly due to mining and quarrying (down 8.5% y/y in December versus a 7.9% decline in November) and electricity, gas, steam and air conditioning supply (down 15.7% y/y in December versus a drop of 12.0% in November).
Manufacturing output fell 5.4% y/y in December following a 6.4% decrease in November.
Construction output grew 7.4% y/y in December, down from 18.1% in November (but was up 20% in 2019).
Retail sales expanded 12.5% y/y in December versus 12.8% growth in November (up 10.5% in 2019).
Agricultural output shrank 14.4% y/y in December following an 18.5% contraction in November (though it finished the year up 1.1%).
Wholesale growth recovered somewhat to 0.1% in 2019 after sliding 1.0% y/y in 9m19.
The other big news of 2019 was the restarting of the Normandy Four meetings where Zelenskiy met Putin face-to-face for the first time. The meeting went well from Ukraine’s perspective where Zelenskiy was able to coax some concession out of Putin (with some little help from German Chancellor Angela Merkel and French President Emmanuel Macron) without being forced to make many himself.
This achievement is important for his political standing at home and as a result Zelenskiy has already started to shake off his neophyte moniker. At the same time the Kremlin is sending signals that it might be ready to end the conflict in
4 UKRAINE Country Report February 2020 www.intellinews.com
