GDP rises 3.5-3.8% in 2Q11

Ukraine’s GDP grew 3.5-3.8% y-o-y in 2Q11, according to estimates published by the National Bank of Ukraine yesterday. Svetlana Rekrut: GDP deceleration in 2Q11 (3.5-3.8% vs. 5.3% in 1Q11) is explained by a higher comparison base from the previous year and a slowdown in domestic consumption, while industrial production remained on pace. The decline in real salaries (to 8.1% in 1H11 vs. 11.1% in 1Q11) led retail to decelerate to 15.3%. Domestic investment demand remained high (construction rose 14.5% y-o-y in 1H11 vs. 6.8% in 1Q11), driven by 2.7x growth in state financing. As the low base effect from last year continues to fade, we expect GDP growth to decelerate in the months ahead and see real growth at 4.4-4.6% for full-year 2011.