Ukraine’s GDP fell 2% y/y in the first quarter of this year and -1.1% in seasonally adjusted terms compared to the same period a year ago, the state statistics committee said on May 14.
Ukraine’s bounce-back from last year’s crisis is going more slowly than hoped and the economy was still contracting over the first two months of this year.
Ukraine’s economy contracted by 2.8% in January and February, compared to the first two months of last year, estimated the Ministry of Economic Development and Trade. Except for retail trade, all sectors were down.
The consensus forecasts put Ukraine’s 2021 GDP growth at 4%. These forecasts were made before the April coronavirus (COVID-19) lockdown in Kyiv and half of the regions. War jitters about Russia’s military threats also may dampen investment.
The National Bank of Ukraine (NBU) downgraded its forecast for real GDP growth in 2021 to 3.8%, from 4.2%. “The introduction of new quarantine restrictions has led to the suppression of business activity,” the bank said. “The effect of last year's low harvests affected the indicators of agriculture, food processing and cargo turnover.” After a 2.8% drop during January-February, growth should return in the current second quarter, the bank predicts. The World Bank also predicts 2021 GDP growth of 3.8%.
The IMF has updated its World Economic Outlook database in which it forecasts Ukraine’s real GDP will increase 4.0% in 2021 and about 3.4% in the next two years. In this way, the Fund sees Ukraine’s economy growing slower than the global one (6.0% in 2021 and 4.4% in 2022, based on IMF estimates) and slightly below the euro area (4.4% in 2021 and 3.8% in 2022).