Ukraine: Economic recovery picks up pace in Q3
December 19, 2016
Ukraine’s recovery continued to gather momentum in Q3, underpinned by improving internal demand, with the economy making up more of the ground lost during the harsh recession suffered in 2015. GDP in Q3 expanded 2.0% on a year-on-year basis, up from the 1.4% figure registered in Q2 and marking the highest growth rate in nearly three years. Q3’s reading is in stark contrast to the 7.2% contraction recorded in the same period of the previous year and overshot the 1.8% preliminary estimate provided by State Statistics Service Ukraine.
Growth in Q3 was driven by a surge in fixed investment, which grew 24.8% yoy, up from a 17.6% rise in the previous quarter. Private consumption expanded 4.9% yoy, higher than Q2’s 4.3%. Impressive as they are, these figures must be considered in context, as both investment and consumption have undergone sustained falls in recent years; the economy is therefore still playing catch-up.
The strong increase in internal demand contrasted an ailing external sector which continued to drag on growth, with exports in Q3 falling 5.5% yoy, compounding the 6.5% fall registered in the previous quarter. Meanwhile, imports rose 13.9%, a large jump from the virtually flat figure recorded in Q2 (-0.1% yoy). In the third quarter, the external sector subtracted 6.7 percentage points from growth.
Author: Oliver Reynolds, Economist