Page 17 - UKRRptApr21

3.5% growth in January. Agriculture contracted 6.5% in February versus a 5.7% drop in January.
Although the economic indicators for 1Q21 will likely be sluggish, they should improve substantially in 2Q21. The slump in retail sales, industrial output and agriculture in 2Q20 stemming from the lockdown and drop in global demand has set a low base for 2Q21. This effect will gradually fade away in 2H21, so we expect GDP to recover by 4% this year following last year's 4% drop.
According to Zelenskiy aide, Yulia Sviridenko, GDP will grow 5.1% in 2021. “In 2021, our expectations for GDP growth are at the level of 5.1%,” she said during a conversation with journalists on the sidelines of the recent Ukraine 30 Forum dedicated to small businesses.
The Ministry of Economy project 4.6% growth in 2021. Ukraine’s economy peaked in 2013 with a GDP of over $183bn and has yet to recover to this level in the past 7 years.
Ukraine’s economy continues its strong post-Covid recovery. The NBU said in a major online press release that “the 2020 GDP fall (by 4.2%) turned out to be less pronounced than expected at the onset of the coronavirus crisis (by 6%). The adverse impact of the stricter quarantine restrictions imposed in January on the economy was only temporary. Business sentiment improved significantly after the January lockdown was lifted. In February, industrial companies reported positive expectations of their business performance, for the first time in the last four months. The expectations of the trade and services sectors almost reached the equilibrium level. The global economy has also rebounded on the back of the rolling out of vaccination campaigns and large-scale stimulus programs.”
Ukraine’s real GDP dropped 2.6-2.8% y/y in January, according to estimates published on March 10 by the Ministry of Economic Development.
The estimates are based on the General Production Index (GPI), which takes into account manufacturing results during the period.
“January’s GDP estimate is discouraging. The comparative base of January 2021 was low (-0.5% y/y), so Ukraine’s output is still at its lows. Poor economic results in January might be partially attributed to the quarantine restrictions on January 8-24. However, the scale of the latest nation-wide quarantine was nothing to compare with the one in March-May 2020 when the economic activity was practically paralyzed given the shutdown of the public transportation and many businesses,” Evgeniya Akhtyrko of Concorde Capital said in a note.
In January, GPI dropped 4.0% year-on-year vs. 2.5% y/y decline in January 2020, the ministry estimated. The negative trend was observed in industry, construction, agriculture and transportation. There three sectors contributed the most to the GDP decline in January.
Given a weak January result, Ukraine’s GDP in 1Q21 is likely to be in decline. Concorde capital expects Ukraine’s GDP to increase 4.1% y/y in 2021.
17 UKRAINE Country Report April 2021 www.intellinews.com