Ukraine: GDP contracts most in three years in Q4
March 12, 2013
In the fourth quarter, GDP declined 2.5% over the same period the previous year, according to data released by the State Statistics Service of Ukraine on 12 March. The figure, which followed the 1.3% fall observed in the third quarter, represented a small improvement over the 2.7% decline initially reported in the flash estimate. The reading marks the second consecutive contraction in output and represents, in fact, the largest decrease recorded in three years. For the full year 2012, GDP grew a meagre 0.2%, well below the 5.2% expansion registered in 2011.
The deterioration over the previous quarter was driven by lower growth in the domestic sector. Private consumption expanded 6.9% in the fourth quarter (Q3 2012: +14.0% year-on-year), while public spending declined 1.4% (Q3: +9.8 yoy). On the other hand, fixed investment contracted 7.5% (Q3: -6.9% yoy). Furthermore, a strong destocking process caused total investment to plummet a much sharper 23.2%.
On the external side, exports contracted 8.7% in the fourth quarter (Q3: -4.9% yoy), while imports dropped 3.5% (Q3: +4.2% yoy). As a result, the net contribution from the external sector to overall growth improved from minus 3.6 percentage points in the third quarter to minus 1.6 percentage points in the fourth.
The government expects economic growth to reach 3.0% this year. Consensus Forecast participants see the economy growing 1.4% in 2013, which is down 0.2 percentage points from last month's forecast. For 2014, panellists anticipate that the economy will grow 3.5%.