Ukraines 1Q12 GDP growth estimate upgraded to 2.0%

UkrStat revised its estimate of Ukraine’s 1Q12 GDP growth to 2.0% yoy from 1.8% yoy earlier. In seasonally adjusted terms, GDP was down 0.2% qoq (vs. the previous estimate of -0.3% qoq). Nominal GDP totaled USD 37.2 bln (+13% yoy) in 1Q12. The only material drivers of economic expansion last quarter were private household consumption (+9.8% yoy in real terms) and gross fixed capital formation (+7.6% yoy). Government consumption added a mere 1.9% yoy, while exports declined 6.8% yoy on broad weakness in global commodity markets.

Ukraine’s 1Q12 GDP component growth

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                                           Chg, yoy   Share

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GDP real growth                           2.0%  100.0%

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By production:            

Trade                                           5.5%   15.1%

Processing industry                       0.2%   13.1%

Transportation                              3.8%   10.7%

Extraction industry                        3.7%    7.0%

Agriculture                                   0.5%    3.0%

Construction                                -3.1%    2.3%

Other                                           n/a   48.8%

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By expenditures:          

Final consumer expenditures         7.9%   92.4%

 incl. household consumption         9.8%   71.1%

 incl. government consumption       1.9%   20.5%

Gross investment                         -24.2%   12.5%

 incl. gross fixed capital formation  7.6%   16.0%

Export                                         -6.8%   55.7%

Import                                        -4.3%  -60.6%

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Source: UkrStat

Vitaliy Vavryshchuk: With 1Q12 data on hand, we maintain our full year projection of economic growth at 1.9%. Household consumption is set to remain robust through end-2012 thanks to double digit growth in nominal salaries and social payments against the backdrop of deflation. The pace of fixed capital formation is likely to diminish as outlays related to infrastructure improvement works will subside in 2H12 with the end of the Euro-2012 football championship. Exports will remain a drag on economic growth as there is no evidence global commodity markets will improve significantly any time soon.