Page 23 - UKRRptSept21

Ukrstat showed on August 16.
However on an annualised basis GDP growth was positive advancing by 5.4%, up from -2.2% y/y growth in the first quarter, although the second quarter growth was less than the 7.3% y/y increase analysts were expecting.
Ukraine’s economy has been recovering from last year’s crisis with industrial production bouncing back strongly in April, up 13% y/y. However, the growth is going off the boil now with industrial production also falling back to a mere 1.1% y/y in June.
The fly in the ointment has been inflation which has come roaring back this year and broke above 10% for the first time in years in July to reach 10.2%, after the National Bank of Ukraine (NBU) had effectively crushed inflation in the summer of 2020 as t briefly dropped below 2%.
In response the NBU was forced to put through a series of large and growth-killing rate hikes -- March (50bp), April (100bp), flat in June and July (100bp) -- in an attempt to bring price rises back under control.
During the same quarter, basic sector output growth, which is a rough proxy for GDP growth, was mainly attributable to improvements in retail trade, industrial output and construction, all thanks to a low base.
Basic sector output growth peaked at 18.3% y/y in April, mainly due to the low base effect, before slowing to 4.1% in May and 1.7% in June. The slowdown was evident in most of the largest sectors, including industrial production, retail trade and agriculture.
“In 1H21, GDP growth reached 1.7% y/y. We expect the economy to continue to see modest growth this year and the annual number to come in at around 1.5%,” Sova Capital said in a note.
The economy is recovering from the "coronavirus downfall,” the Prime Minister Denys Shmyhal told the Government on August 26. "For the first time in many months, the agricultural sector grew by 2.5%. There’s an active upturn is in important industries. Metallurgy has grown by 7% this year, mechanical engineering - by 10%," he noted. The profit of medium and large Ukrainian enterprises has also risen. In the first half of the year, it amounted to UAH462bn, which is 76% more than last year. These funds are becoming an important source of domestic investment and wage growth, Shmyhal said.
J.P. Morgan has downgraded the forecast of real GDP growth in Ukraine in 2021 to 4.5% from 5.6% in the April forecast, while in 2022 the country’s economy is expected to grow by 5%, follows from the materials EMEA Emerging Markets report, which is available to Interfax-Ukraine.
According to them, J.P. Morgan predicts average annual inflation in Ukraine at 9% in 2021 with a further decline to 7.3% in 2022.
At the same time, at the end of this year, inflation is expected at 8.7%,
23 UKRAINE Country Report September 2021 www.intellinews.com