Ukraine’s GDP Growth Accelerates to 3.1% YoY in 1Q18

May 21, 2018

The Ukrainian economy grew by 3.1% YoY in 1Q18, according to the preliminary estimate from the State Statistics Committee released on May 15. The data also showed that the country’s seasonally-adjusted GDP rose by 0.9% on a quarterly basis in the period. The 1Q18 figure is an improvement after growth of 2.2% in 4Q17 and 2.4% in 3Q17; full-year growth of 2.5% YoY was registered for 2017. The government built the national budget for 2018 on a forecast for a GDP rise of 3.0% and inflation of 9.0%.

The country’s economic growth, which is in line with global trends, continues to rely mostly on improvement in consumer sentiments. UkrStat reported that retail sales grew by 7.6% YoY in 1Q18. Meanwhile, capital investments and overall industrial output showed a quite small increase in the period. The detailed data for capital investments has not been made available yet, but according to the National Bank we know that foreign direct investments (FDI) decreased by 36% YoY to USD 296mn in 1Q18. The industrial production in Ukraine rose 2.4% YoY in 1Q18, which was lower than expected.      
In our view, the GDP growth of 3.1% YoY in 1Q18 is still not sufficient for Ukraine, given the scale of the country’s population and industrial potential. For comparison, Poland’s GDP increased by 5.1% YoY in 1Q18, according to Statistics Poland. Meanwhile, the European Economic Area economy grew by 2.5% YoY in the period.

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