Ukraine's post-collapse economic recovery stalls with GDP growth of 2.8% in 3Q18

Ukraine's post-collapse economic recovery stalls with GDP growth of 2.8% in 3Q18
Ukraine's GDP growth slowed to 2.8% in 3Q18 from 3.8% in 2Q18
By bne IntelliNews November 15, 2018

Ukraine’s post-collapse economic recovery seems to have stalled after economic growth stumbled, expanding by only 2.8% y/y in the third quarter, down from 3.8% in the second quarter and 3.1% in the first, Ukrstat reported on November 14. The performance is even worse when growth is adjusted for seasonal differences with an expansion of only 0.4%

Ukraine has been climbing out of a deep recession when the economy contracted by a massive 17% in the first quarter of 2015. Growth went positive again in the second quarter of 2016, and seemed to be gathering some momentum over the first two quarters of this year, only to stumble in the third. Moreover, the prognosis has been deteriorating with the IMF recently downgrading Ukraine’s outlook. The fund left its full year estimate for growth in 2018 at 3.5% but downgraded its forecast for 2019 to an unimpressive 2.7% from 3.3% earlier.

In October the World Bank also worsened the forecast for Ukraine's GDP growth in 2018 to 3.3% from 3.5% and in 2019 to 3.5% from 4%

“The Ukrainian economy has been growing 11 quarters in a row … The situation is in line with the forecasts of the government and international partners,” the State Statistics Service noted in a release on the government’s website.

The National Bank of Ukraine (NBU) at the beginning of November estimated GDP growth in the third quarter at 3.1%, and kept the full year forecast at 3.4%. Next year the NBU also expects growth to slow to 2.5%, before accelerating again to 2.9% in 2020.

The national budget for 2018 and the draft national budget for 2019 are built on a forecast of economic growth of 3% annually in these years.

All these forecasts predict growth that is well below Ukraine’s economic potential. A number of factors, including the war with Russia in the eastern regions, political uncertainty ahead of the key 2019 elections and the government’s failure to implement sweeping reforms, are holding back a faster pace of growth.