Ukraine Economic Forecast

Ukraine Economic Outlook

September 4, 2018

The economy continued to gain traction in the second quarter, following a solid outturn at the beginning of the year. Domestic demand seemingly remained at the forefront of the expansion, as easing inflationary pressures, coupled with a tightening labor market and rising consumer lending, likely bolstered household consumption growth in the quarter. In addition, investment activity remained buoyant in Q2, despite losing some momentum from Q1, as investment in the mining and quarrying, and manufacturing sectors continued to soar at a double-digit pace. Meanwhile, external sector dynamics appear to have improved slightly from the previous quarter: Exports accelerated in Q2 on the back of solid demand from EU countries, led by Italy and Poland, outpacing imports for the first time in over a year. On a less positive note, unfavorable weather conditions have led to a worse-than-expected crop harvest this year, which clouds the exports outlook and is likely to lead to higher food prices domestically.

Ukraine Economic Growth

Robust domestic demand should buttress economic momentum this year, on the back of solid private consumption and investment activity growth. However, import growth is seen outpacing that of exports in the second half of the year, mostly on solid domestic demand and higher energy imports, which will likely take a bite out of overall GDP growth. Downside risks remain significant, largely stemming from mounting political tensions domestically and geopolitical uncertainties. FocusEconomics panelists see GDP rising 3.2% in 2018, up 0.1 percentage points from last month’s forecast, and 3.1% in 2019.

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

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