Ukraine: Comprehensive data reveals faster growth in Q4
Ukraine’s economy ended last year on a better-than-expected note according to comprehensive data released by the State Statistics Service of Ukraine. GDP grew 2.2% over the same period of 2017 in Q4, above the preliminary estimate of a 1.8% expansion. In addition, the statistical institute revised historical national accounts data, including upgrading the Q3 expansion to 2.4% (previously reported: +2.1% year-on-year). Nonetheless, the fourth quarter’s result marked the fourth consecutive period of decelerating growth. For the full year 2017, GDP grew 2.5%, a notch above 2016’s 2.4% expansion.
Behind the fourth quarter’s slowdown was the external sector, which dragged on activity due to skyrocketing imports. Imports soared 20.2% year-on-year, the fastest growth since Q2 2011, mainly due to reviving domestic demand after a deep recession and higher energy prices. In addition, disrupted linkages within the country because of the trade blockade with the rebel-held eastern regions have led to higher imports, as firms must obtain certain goods overseas. Exports growth rose from 7.2% in Q3 to 8.8% in Q4, the best result since Q4 2016.
The domestic economy performed robustly in the fourth quarter, as the economic recovery continues. Household consumption rose 10.7% on an annual basis, a notable acceleration from Q3’s 6.3% expansion and the best result since Q2 2012. Rising wages likely gave a boost to household spending. Fixed investment growth was also robust in Q4 rising from 15.0% in Q3 to 16.7%. A more stable political environment is helping to shore up business confidence, but geopolitical concerns have not yet gone away fully. Meanwhile, government spending slowed from a 7.4% expansion in Q3 to a 3.2% rise in Q4.