Ukraine GDP grew 0.7% in 7M16

Ukraine’s GDP grew 0.7% yoy in 7M16 and will grow 1.0% yoy (+/- 0.2ppt) in the full year, according to the Economy Ministry’s preliminary figures released on Sept. 6. The full-year forecast was revised from 2.0% growth previously estimated. Meanwhile, the State Statistics Service estimated 0.1% yoy growth in 1Q16 and 1.3% yoy GDP growth in 2Q16. The IMF anticipates 1.5% GDP growth in Ukraine in 2016.

Alexander Paraschiy: The Economy Ministry’s revised forecast for the year is in line with our initial projection of 0.9% yoy GDP growth for 2016. This reflects gradual economic revival based primarily on investment demand. In particular, investment in fixed assets grew 9.6% yoy in 1H16 from 9.2% yoy a year ago. Another positive indicator is consumer spending as organized retail trade grew 3.0% yoy in 7M16. Still, the key growth drivers are rather weak and a major part of the reviving internal demand will lead to higher imports, thus promising trade deficit expansion with a subsequent negative impact on GDP. Considering such trends, we can hardly expect any positive surprises and just reiterate our initial forecast of 0.9% yoy GDP growth for 2016.