The State Statistics Service has improved estimate of GDP contraction to 1.3% y/y in Q3 compared to previous estimate of 1.5% (announced at the end of October 2013). In q/q terms, GDP declined by 0.3% in compliance with the season factor. Nominal GDP in Q3 amounted to UAH 392.63bn (UAH 301.6bn in Q1 and UAH 351.9bn in Q2).

On Nov 20, the PM Mykola Azarov announced that the government expects to complete the year with GDP growth. Due to the world economic crisis, economic growth rates slowed down in Ukraine. Over 10 months of the current year, GDP contracted by 0.6%, he added. However, the government still aims to complete the year with a slight growth.

Ukraine's economy remained in recession in Q3, affected by the tough external environment, poor business climate and domestic policy uncertainty. Construction industry continues to stagnate, as investment activity remains subdued. Moreover, the country 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 did not manage to get a loan from the IMF, because the government continues to reject conditions including higher household energy tariffs.

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. In Q1, GDP declined by 1.1% y/y. Ukraine's GDP growth in 2012 slowed to 0.2% from 5.2% in 2011.

Valerii Lytvytskyi, the chief adviser to the chairman of the National Bank of Ukraine (NBU), is hoping that the GDP growth rate in 2013 will be more than 0.2% y/y. Fitch predicts GDP growth of 2.2%, annual average inflation of 5.0% and nominal GDP of USD 178.7bn in 2014. For 2013, the agency predicts Ukraine's GDP growth level at 0%, nominal GDP of USD 176.9bn and annual average inflation rate of 1.5%. EY (Ernst&Young) has worsened GDP growth forecast for Ukraine from 0.3% to 0.1% in 2013. In 2014, the EY forecasts GDP growth of 2.5% y/y compared to an earlier forecast of 3.9%. The World Bank has lowered its GDP growth forecast for 2013 from 1% to zero. We believe that GDP will contract by 1% y/y in 2013.