Ukraine’s GDP Growth Accelerates to 4.6% YoY in 2Q19

August 19, 2019

The Ukrainian economy’s growth accelerated to 4.6% YoY in 2Q19 from 2.5% YoY registered in 1Q19, according to the preliminary estimate from the State Statistics Committee released last week. The data also showed that the country’s seasonally-adjusted GDP rose by 1.6% on a quarterly basis in the period.

The new GDP data is definitely a surprise to the upside and could be partially credited to optimism among businesses about the economic policies of new President Zelenskiy (it became clear that Zelenskiy would defeat incumbent Petro Poroshenko in mid-April at the beginning of the quarter). Nonetheless, we emphasize that the positive trends of rising consumer spending and rising real wages in the country have been in place for a couple of years already. UkrStat reported that the average wage in Ukraine rose by 18% YoY in June in hryvnia terms, and consumer sentiments have improved this year amid a 9.1% YtD appreciation in the national currency against the dollar. Growth in private consumption was also reflected in a 10.3% YoY increase in retail sales in 1H19. On the flip side, the real sector of economy did not show much improvement, with the overall industrial production index edging up by just 0.5% YoY in 1H19.

For now we are sticking with our base case scenario that Ukraine’s GDP will rise by 3.0% in 2019, but we are raising our growth estimate for 2020 to 4.2%.

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