Ukraine Economic Forecast

Ukraine Economic Outlook

October 30, 2018

The economy seemingly shifted into a lower gear in the third quarter on the heels of a robust outturn in Q2. Industrial output decelerated sharply on average in Q3, amid a deteriorating manufacturing sector. Retail sales growth also lost steam, in part due to the hryvnia’s weakening against the U.S. dollar which weighed on purchasing power. On the external front, the available data is also downbeat: Average merchandise export growth in July–August came in below that of Q2 amid decelerating exports of chemicals and metals. Meanwhile, the government signed a new USD 3.9 billion agreement with the IMF on 19 October, breaking a prolonged deadlock over the resumption of the Fund´s financial support. The politically unpopular decision of raising household gas tariffs by 23.5% was a critical precondition for the deal. The agreement will shore up the government’s finances and should boost investor confidence, allowing Ukraine to once again issue dollar-denominated bonds to finance country’s debt.

Ukraine Economic Growth

Growth is expected to moderate slightly next year; nevertheless, it should remain solid and is seen picking up pace again in 2020. Domestic demand will remain in the driver’s seat of the expansion, led by robust public and private investment activity. Furthermore, household consumption should remain strong amid tightening labor market conditions and lower inflation. FocusEconomics panelists see GDP rising 2.9% in 2019, down 0.1 percentage points from last month’s forecast, and 3.1% in 2020.

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 %)-4.3-10.1-
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 %)-8.628.8-37.810.218.8
Exchange Rate (vs USD)8.2415.8224.0327.1028.16
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)81.257.738.940.449.1
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)79.096.4136124103

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Ukraine Facts

Bond Yield19.000.0 %Jul 27
Exchange Rate27.790.30 %Nov 15
Stock Market6080.21 %Nov 15

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