Ukraine remains in recession as GDP contracts by 1.5% y/y in Q3.

By bne IntelliNews October 30, 2013

Ukraine's economy remained in recession in Q3, as country’s GDP has contracted by 1.5% y/y, the fifth consecutive quarter of negative growth, the State Statistics Service has announced. The indicator was worse than the median estimate of 12 economists in a Bloomberg survey for 0.2% growth. In q/q terms, GDP declined by 0.4% in compliance with the season factor.

In mid-September, the State Statistics Service has worsened the estimate of GDP decline in Q2 from 1.1% to 1.3% y/y. Adjusted for the seasonal factor, GDP shrank 0.5% q/q in Q2. Nominal GDP made UAH 351.896bn in Q2. In Q1, GDP declined by 1.1% y/y. Ukraine's GDP growth in 2012 slowed to 0.2% from 5.2% in 2011.

Ukraine is struggling amid falling global demand for products such as steel, a widening current-account gap, shrinking foreign reserves and trade restrictions from Russia, its biggest export market. In addition, the country has did not manage to get a loan from the IMF, because the government continues to reject conditions including higher household energy tariffs.

In H2, the government expects the GDP growth to speed up, announced First Vice PM  Serhiy Arbuzov. The government’s experts point to a slight increase in demand for metallurgical products on foreign markets.

There are also grounds to count on a price growth for agricultural products on international markets. At the same time, the experts note that unfavorable weather conditions at the end of August and over entire September have substantially worsened agricultural indexes by results of Q3, which will have its negative effect on overall GDP during this period. However, in October, the weather has settled in general, which enables boosting of grain crops harvesting, as well as to continue sowing of winter crops. As a result of this, in the experts' opinion, it is worth expecting GDP growth in Q4 both in the agrarian sector and in the transport.

On Oct 8, the IMF has improved the GDP growth forecast to 0.4% y/y in 2013 from zero. In 2014, the GDP growth is seen at 1.5%. The fund's experts noted that Ukraine had been "in recession since mid-2012." They also believe that in 2013-2014 "activity will be held back by weak exports, political uncertainty, and tight monetary conditions in defense of an exchange rate under pressure because of the economy's twin deficits."

On Oct 7, the World Bank has worsened its forecast for Ukraine's GDP growth in 2013 from 1% to 0%. The World Bank also worsened its outlook on Ukraine's GDP growth in 2014 from 3% to 2%, and also supposes the country's GDP to shrink 1% in 2015. Nominal GDP in 2013 is predicted at UAH 1,437.1bn, in 2014 at UAH 1,502.5bn and in 2015 at UAH 1,651.0bn.

Related Articles

Norway's Scatec Solar to construct €85mn solar plant in Ukraine

Norway's Scatec Solar is going to begin the construction of a €85mn solar power with a total capacity of 83 MW in Ukraine's Cherkasy region this year, according to the company's June 12 ... more

Macedonia blocks bank accounts of Kazandol project investors

The bank accounts of Copper Investments (COPIN), the investor in Macedonia’s Kazandol mining project via its subsidiary Sardich MC, have been blocked since April 12 and the company’s employees ... more

Finland gives final nod to construction of Nord Stream II

Finland has issued a second and final permit for the construction of the controversial Nord Stream II pipeline that is to pump gas from Russia directly to Germany via a Baltic Sea route, the Regional ... more

Dismiss