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Ukraine GDP Q2 2019

Ukraine: Second estimate confirms growth soared to two-and-a-half-year high in Q2

GDP growth jumped to 4.6% year-on-year in the second quarter, according to a second estimate released by Ukraine’s Statistical Institute on 19 September. This matched the preliminary reading and was substantially up from the 2.5% expansion recorded in Q1. Moreover, the result marked the highest reading since Q4 2016.

The acceleration in the second quarter was largely driven by strong private consumption, which rose 11.8% year-on-year in Q2, up from 10.7% in the previous quarter. This was the strongest increase since Q4 2017 and came on the back of growing wages, an improvement in consumer sentiment and booming retail sales. Meanwhile, fixed investment increased 7.9% in Q2, a decelerating from Q1’s 17.4% surge. Government spending fell at a milder rate in Q2 compared to the previous quarter (Q2: -6.4% year-on-year; Q1: -8.3% yoy).

On the external front, export growth moderated (Q2: +4.4% yoy; Q1: +6.8% yoy), reflecting the weakening global backdrop while still signaling some resilience due to solid agricultural exports. Meanwhile, stronger consumer demand pushed up import growth in Q2, which came in at 9.1% year-on-year in Q2 (Q1: +6.5% yoy). As a result, the external sector dragged on growth in Q2, subtracting 2.7 percentage points from the overall expansion. This marked a deterioration from the previous quarter’s result when the external sector subtracted 1.0 percentage point.

The surge in the country’s GDP growth in Q2 has improved the outlook for the Ukrainian economy. Accommodative monetary policy, wage growth and improved optimism among consumers should support growth on the domestic front, while strong crop yields and improved terms of trade should boost the external sector.

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