Ukraine GDP Q4 2019

Ukraine

Ukraine: Growth falls to near four-year low in Q4 2019

March 20, 2020

GDP growth fell to 1.5% year-on-year (yoy) in the fourth quarter of last year (Q3: +4.1% yoy), marking the weakest expansion since Q1 2016, according to a preliminary estimate by Ukraine’s Statistical Institute. On a quarter-on-quarter basis, the economy flatlined in Q4, down from a 0.6% expansion in Q3.

Domestic demand growth was held back by destocking and a steep fall in government spending (Q4: -6.8% yoy; Q3: +2.1% yoy) in the fourth quarter of last year. Nevertheless, private consumption growth accelerated to 11.7% (Q3: +10.2% yoy) on the back of receding inflation, while fixed investment growth jumped to 18.6% (Q3: +13.2% yoy) amid confidence on President Volodymyr Zelensky’s commitment to reform and secure a deal with the IMF.

The external sector weighed on growth in Q4 2019, subtracting 0.2 percentage points from overall growth, contrasting a 1.5 percentage point contribution made in Q3 2019. The downturn reflected a mark slowdown of in export growth (Q4: +3.1% yoy; Q3: +12.7% yoy) against the backdrop of a marked appreciation of the hryvnia and downbeat agricultural and industrial output. Meanwhile, import growth decelerated to 2.4%, from 7.3% in the previous quarter.

The economy is seen sustaining a solid rate of expansion this year. Fixed investment is seen expanding at a solid pace on the back of cheaper financing conditions, while a tightening labor market should shore up household spending. However, backtracking on the reform agenda may put IMF support at risk this year, ahead of hefty debt repayments.

FocusEconomics panelists project GDP to expand 3.2% in 2020, which is unchanged from last month’s forecast, and 3.6% in 2021.


Author:, Economist

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