Page 18 - UKRRptJul21

4.6% to 3.9%.
Ukraine’s real GDP plunged 2.2% y/y in 1Q21, the State Statistics Service reported on June 22, worsening its preliminary estimate of -2.0% y/y. The economy declined 1.2% q/q seasonally adjusted.
“Ukraine’s economic performance was very weak in 1Q21, especially given the quite low comparative base of 1Q20 (GDP declined 1.2% y/y in 1Q20). The plunge in investment is an indicator of a poor financial state and the overall confidence of Ukraine’s businesses,” Evgeniya Akhtyrko of Concorde Capital said in a note. “Exports in 1Q21 looked quite impressive in money terms in 1Q21, but a high respective deflator (33.9%) turned the real result to the red. We expect Ukraine’s economy will increase 4.1% y/y in 2021 (vs. a 4.0% y/y decline in 2020).”
Ukraine nominal GDP amounted to UAH1,009bn ($36.1bn) in 1Q21, which is 18.1% more y/y. The GDP deflator amounted to 20.7% in 1Q21.
The real change was weighed down by a gross fixed investment plunge of 7.8% y/y in 1Q20. The contribution of external trade was also negative with real exports plunging 17.4% y/y and imports advancing 3.7% y/y. At the same time, private consumption picked up 4.4% y/y. In addition, public consumption advanced 3.2% y/y.
On the production side, the economy was mostly affected by falls in trade (-4.9% y/y), transportation (-8.3% y/y), manufacturing (-2.8% y/y) and construction (-12.7% y/y). At the same time, the value added advanced in financial and insurance services (9.6% y/y), in real estate operations (4.4% y/y), information technologies (4.8% y/y) and electricity & gas supply (4.2% y/y).
The level of the shadow economy in Ukraine in 2020 amounted to 30% of the official GDP, compared with 27% of GDP in 2019, according to the analytical note of the Ministry of Economy. According to the ministry, two of the four methods for calculating the shadow economy recorded an increase in the level of "shadow" compared to 2019: the method of unprofitable enterprises - by 7 percentage points, to 27% of official GDP, and the monetary method - by 1 percentage point, to 31% of GDP. At the same time, the ministry notes that for certain types of economic activity (foreign economic activity), companies have shown an unjustifiably high growth in the unprofitableness of enterprises. At the same time, the method "household expenditures - retail turnover" showed a decrease in the level of the shadow economy - by 3 p.p., to 22% of GDP, and according to the electric method, the reduction was 2 p.p., to 23% of GDP, the Ministry of Economy said.
Ukraine's key industries output index jumped 18.3% y/y in April following a decline of 0.1% in March, Sberbank CIB said in a note on June 2.
“The main factor at play was the low base from April last year, when coronavirus restrictions were introduced,” analysts said.
Construction saw the biggest improvement, with volumes expanding 12.9% in April following an 11.5% decline in March.
18 UKRAINE Country Report July 2021 www.intellinews.com