Ukraine Economic Forecast

Ukraine Economic Outlook

October 2, 2018

The Ukrainian recovery picked up steam in the second quarter. Detailed national accounts data showed stronger-than-previously-estimated growth largely due to an early start of the harvesting season this year. Overall, buoyant domestic demand led the expansion in Q2: Public spending growth soared by double-digits thanks to higher household utility subsidies, while a robust labor market and higher remittances propped up solid household consumption growth. Fixed investment, meanwhile, decelerated in Q2, although growth remained robust nonetheless with budget capital expenditure on infrastructure projects rising markedly. On a less positive note, the IMF mission to Ukraine concluded in mid-September without reaching an agreement for the next tranche of financing under the existing USD 17.5 billion assistance program. Nevertheless, amid ongoing discussions with the IMF—where gas tariff regulation and tax policy reform remain key points of contention—Ukraine signed a EUR 1.0 billion loan agreement with the EU which should replenish the country’s international reserves.

Ukraine Economic Growth

Solid domestic demand dynamics should ensure steady recovery for the Ukrainian economy this year and next. Tighter labor market conditions will prop up private consumption growth, while fixed investment should remain strong on the back of buoyant public and private investment activity. Considerable risks to the outlook stem from the uncertainty surrounding the IMF agreement as well as from next year’s elections. Met the why particular panelists see GDP rising 3.2% in 2018 and 3.0% in 2019, which is down 0.1 percentage points from last month’s estimate.

Ukraine Economy Data

Population (million)45.242.842.642.442.3
GDP per capita (USD)3,9743,0582,0552,1752,678
GDP (USD bn)18013187.592.3113
Economic Growth (GDP, annual variation in %)0.0-6.6-
Consumption (annual variation in %)6.9-8.3-
Investment (annual variation in %)-8.4-24.0-9.220.418.2
Industrial Production (annual variation in %)-4.3-11.1-
Retail Sales (annual variation in %)5.6-9.8-
Unemployment Rate7.
Fiscal Balance (% of GDP)-4.3-4.5-1.6-2.3-1.4
Public Debt (% of GDP)39.969.479.180.971.8
Inflation Rate (CPI, annual variation in %, eop)0.524.943.312.413.7
Inflation Rate (CPI, annual variation in %)-0.312.148.514.914.5
Inflation (PPI, annual variation in %)-
Policy Interest Rate (%)6.5014.0022.0014.0014.50
Stock Market (annual variation in %)-8.628.8-37.811.218.8
Exchange Rate (vs USD)8.2415.8224.0327.1128.16
Exchange Rate (vs USD, aop)8.1512.0221.9525.5626.60
Current Account (% of GDP)-9.2-3.51.8-1.5-1.9
Current Account Balance (USD bn)-16.5-4.61.6-1.3-2.1
Trade Balance (USD billion)-22.1-7.1-3.5-6.8-9.4
Exports (USD billion)59.150.635.433.639.7
Imports (USD billion)81.257.738.911.449.1
Exports (annual variation in %)-8.3-14.5-29.9-5.218.2
Imports (annual variation in %)-5.8-29.0-32.63.821.5
International Reserves (USD)20.47.513.315.518.8
External Debt (% of GDP)79.096.4136124113

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Ukraine Facts

Bond Yield19.000.0 %Jul 27
Exchange Rate28.050.30 %Oct 18
Stock Market5600.21 %Oct 18

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