Ukraine’s real GDP plunged 2.2% year on year in 1Q21, the State Statistics Service reported on June 22, worsening its preliminary estimate of -2.0% y/y. The economy declined 1.2% quarter on quarter seasonally adjusted.

“Ukraine’s economic performance was very weak in 1Q21, especially given the quite low comparative base of 1Q20 (GDP declined 1.2% y/y in 1Q20). The plunge in investment is an indicator of a poor financial state and the overall confidence of Ukraine’s businesses,” Evgeniya Akhtyrko of Concorde Capital said in a note. “Exports in 1Q21 looked quite impressive in money terms in 1Q21, but a high respective deflator (33.9%) turned the real result to the red. We expect Ukraine’s economy will increase 4.1% y/y in 2021 (vs. a 4.0% y/y decline in 2020).”

Ukrainian nominal GDP amounted to UAH1,009bn ($36.1bn) in 1Q21, which is 18.1% more y/y. The GDP deflator amounted to 20.7% in 1Q21.

The real change was weighed down by a gross fixed investment plunge of 7.8% y/y in 1Q20. The contribution of external trade was also negative, with real exports plunging 17.4% y/y and imports advancing 3.7% y/y. At the same time, private consumption picked up 4.4% y/y. In addition, public consumption advanced 3.2% y/y.

On the production side, the economy was mostly affected by falls in trade (-4.9% y/y), transportation (-8.3% y/y), manufacturing (-2.8% y/y) and construction (-12.7% y/y). At the same time, the value added advanced in financial and insurance services (9.6% y/y), in real estate operations (4.4% y/y), information technologies (4.8% y/y) and electricity & gas supply (4.2% y/y).