Page 4 - UKRRptMar20
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1.0 Executive summary
Ukraine’s economy slowed in the last quarter of 2019 as despite the progress made in the last year the economy is still performing under par.
Ukraine’s real GDP grew 1.5% year-on-year, or 0.1% quarter-on-quarter seasonally adjusted in November-December 2019, according to preliminary estimates by the nation's state statistics service Ukrstat published on February 14.
After a slow start in 2019 of 2.5% for the first quarter, Ukraine’s GDP roared ahead in the second quarter expanding at 4.6%, then fell back somewhat in the third quarter to 4.1% before stalling in the last quarter.
Evgeniya Akhtyrko at Kyiv-based brokerage Concorde Capital believes that the fourth-quarter cooling of economic growth was due to the drop in industrial output and the weak result of the agricultural sector, which was partially due to the shift in seasonality.
"Given this estimate, 2019 GDP full year growth is likely to land at 3.2% y/y (vs. 3.3% y/y in 2018)," she added. Concorde expects Ukraine’s economy to grow to 3.3% y/y in 2020.
The slowdown was also visible in industrial production, which contracted sharply in January, down a whopping 5.1%. indeed, industrial production failed to much at all in all of 2019 apart from a spike in April.
However, on the other macro-numbers Ukraine did much better. The big success of last year was the National Bank of Ukraine (NBU) success at taming inflation which continues to fall and has cleared the way for more large rate cuts this year that should boost growth.
The hryvnia is also stable and trade is growing, although Ukraine is still running a several billion dollar a year trade deficit with both the EU and Russia which both remain its most important trade partners. However, this deficit is easily covered by the remittances $12bn a year workers abroad are sending home.
And retail is emerging as a driver as incomes start to rise and foreign retail chains are now starting to move in to claim their market share before the real competition begins. This is also reflected in the real estate market where new retail and office projects are starting in anticipation of growth in the next years.
On the politics front Ukraine is inching towards peace with Russia,
although the next Normandy Four meeting with Russia slated for April looks like it will be delayed as both sides are bickering over the details and Ukrainian president Volodymyr Zelenskiy wants to change the Minsk agreement to give Ukraine control of the border earlier than the document allows. The reform drive continues unabated and more progress was made on land reform laws needed to set up a land market. However, laws to prevent oligarch Ihor Kolomoisky taking back control of Privatbank were delayed again and the oligarch remains a major PR headache for Zelenskiy.
4 UKRAINE Country Report March 2020 www.intellinews.com
