Ukraine: Second estimate confirms softer contraction in GDP in Q3
December 21, 2020
GDP fell at a softer rate of 3.5% year-on-year in the third quarter, according to a second estimate released on 21 December. The result matched the preliminary estimate and marked a significant improvement from the 11.4% contraction logged in the second quarter.
The third quarter’s result was chiefly driven by a recovery in total consumption amid the easing of Covid-19 containment measures. Private consumption rebounded, growing 1.0% year-on-year in Q3 compared to the 10.4% plunge logged in Q2. Similarly, government spending jumped 8.2% in the third quarter, rebounding from the second quarter's 1.7% contraction. However, fixed investment contracted 23.8% in Q3, marking the worst result since Q1 2015 (Q2: -22.3% yoy) and thus weighing on the overall reading.
On the external front, exports of goods and services fell at a more moderate rate of 7.2% in Q3 (Q2: -9.0% yoy), reflecting slightly healthier foreign demand conditions. In addition, imports of goods and services fell at a slower pace of 10.1% in Q3 (Q2: -23.4% yoy).
On a seasonally-adjusted quarter-on-quarter basis, the economy grew 8.5% in Q3, contrasting the previous quarter's 9.9% contraction.
Looking forward, the challenging economic backdrop is set to persist early next year, due to the reintroduction of lockdown measures at home and abroad. The economy should rebound solidly later in 2021, however, bolstered by a revival in domestic demand, and accommodative fiscal and monetary policies. That said, uncertainty over the evolution of the pandemic and subdued recoveries in the country’s main trading partners pose major risks to the outlook.
Author: Almanas Stanapedis, Research Team Manager