Ukraine: GDP contracts in Q1 2020 on Covid-19 fallout
May 15, 2020
A preliminary release revealed the economy contracted 1.5% year-on-year in Q1, contrasting Q4 2019’s 1.5% expansion. Although a comprehensive release is not yet available, the downturn likely reflected a broad-based decline in economic activity as Covid-19 and the measures to curtail its spread hammered demand.
On a quarter-on-quarter and seasonally-adjusted basis, the economy shrank 0.8% in Q1, after stagnating in Q4 2019.
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.
Author: Nicolás J. Aguilar, Economist