Ukraine: GDP contracts in Q1
June 19, 2020
The economy swung to contraction in the first quarter, with GDP decreasing 1.3% year-on-year (Q4 2019: +1.5% year-on-year).
On the domestic side, fixed investment contracted 21.4% in Q1, contrasting the 18.6% increase in the prior quarter; private consumption grew 8.1% in Q1, marking the slowest acceleration since Q2 2018 (Q4 2019: +11.7% yoy); and government consumption dropped at a quicker pace of 9.7% in Q1 (Q4 2019: -6.8% yoy).
Meanwhile, exports of goods and services growth waned to 0.9% in Q1 (Q4 2019: +3.1% yoy). Conversely, imports of goods and services contracted 4.0% in Q1 (Q4 2019: +2.4% yoy).
On a seasonally-adjusted quarter-on-quarter basis, the economy contracted 0.7% in Q1, after flatlining in Q4 2019. Q1's reading marked the largest contraction since Q2 2015.
The economy is set to shrink this year as Covid-19 takes its toll. A higher unemployment rate and social distancing measures will weigh on private consumption, while lingering uncertainties should restrain capital inflows. On the upside, the recently secured IMF loan should give the government room to boost fiscal spending and cushion the downturn.