Ukraine: Economy grows at fastest pace since Q4 2013 in Q2
August 26, 2016
Ukraine’s crisis-hit economy picked up steam in the second quarter of 2016 but the country’s recovery remained lackluster. According to a preliminary estimate released by State Statistics Service Ukraine, GDP increased 1.3% over the same period last year, which was a significant improvement over the mere 0.1% growth recorded in Q1. The result, which marked the fastest pace of growth since Q4 2013, was virtually in line with FocusEconomics analysts’ expectations of a 1.4% expansion and was partly driven by base effects as the economy plummeted 14.7% in Q2 2015. Nonetheless, the reading suggests that the economy is on a recovery path after contracting almost 10.0% last year.
While a turnaround has been seen in the country’s economic data, Ukraine’s agreement with the International Monetary Fund (IMF) continues to hit roadblocks. A USD 1.6 billion aid tranche from the IMF that was expected in July has been delayed over the slow passage of anti-corruption reforms. The country has not received any fresh funds since August 2015, which has placed the government’s limited finances under strain. Commenting on the next IMF disbursement and Ukraine’s growth outlook, Nicolaie Alexandru-Chidesciuc, economist at JPMorgan, adds:
“We remain of the view that IMF will disburse in September […].We forecast accelerating GDP growth in the period ahead. The NBU expects GDP to expand 1.3%oya in both 3Q and 4Q16, while we have a much more optimistic forecast and expect 4%oya on average in 2H16. We think that positive momentum will be extended into 3Q and we also see a large positive contribution from agricultural output.”