Page 17 - UKRRptJan22

28.9% more y/y. The GDP deflator amounted to 25.5% in 3Q21.
GDP growth was mostly driven by gross fixed investment, which advanced 14.5% y/y in 3Q21. In addition, gross private consumption picked up 9.0% y/y. At the same time, public consumption slid 1.0% y/y. The contribution of external trade was negative with real exports plunging 8.6% y/y and imports jumping 12.3% y/y.
On the production side, economic advancement was mostly due to the growth in agriculture (5.1% y/y), financial and insurance services (7.6% y/y), information & telecommunication (5.4%) and transportation (4.1% y/y). At the same time, the value added dropped in manufacturing (-0.6% y/y), public administration (-8.9% y/y), and electricity & gas supply (-0.1% y/y).
Key sector output in Ukraine surged 20.3% y/y in October after a 4.4% drop in September. The surge was attributable to a low base from October 2020 and a spike in agricultural output.
Industrial output grew 1.4% y/y after contracting 0.7% in September, driven by a rebound in manufacturing (to 0.4% y/y growth versus a 1.1% drop in September).
Agricultural output growth shot up to 61% y/y after an 11.4% decline in September, the volatility most likely owing primarily to the weather conditions.
Retail sales growth eased to 5.7% from 5.9% in September thanks to slowing real wage growth (4.0% versus 6.9% in September), but it remained strong.
Construction activity plunged 15.2% y/y after a 10.1% increase in September. We consider the current volatility in construction and agriculture as something of a one-off and expect growth in the sectors to stabilize going forward.
In 3Q21, GDP growth eased to 2.4% y/y from 5.7% in 2Q21, the moderate expansion driven by construction, agriculture and retail sales. In seasonally and calendar-adjusted terms, GDP climbed 1.4% q/q. Since GDP has not returned to the pre-Covid levels of 2019, there seems to be room for further recovery. We expect economic growth to stabilize in 4Q21 due to moderation in the construction and agriculture sectors. We project full-year GDP growth at 2.5%.
More than 9% of budget expenditures in 2022 are invested in economic development (UAH140bn or $5.18bn). Over the past 10 years, no budget provided for such a volume of capital expenditures as it will be in 2022, the Prime Minister, Denis Shmygal, wrote on Facebook. The Prime Minister also noted, that the State Budget for 2022 is balanced and realistic, and the priorities of the budget remain the same: medicine, education, security and defence, infrastructure, business support, and raising social standards.
17 UKRAINE Country Report January 2022 www.intellinews.com