Real GDP rises 3.4% y-o-y in 3Q10

Ukraine’s GDP grew 3.4% y-o-y in 3Q10 in real terms, according to data released yesterday by the State Statistics Committee, which is marginally below the preliminary estimate of +3.5%. This marks deceleration from +5.9% y-o-y in 2Q10 and brings GDP growth for 9M10 to approximately +4.7% y-o-y. Mykyta Mykhaylychenko: The deceleration in 3Q happened on the back of deterioration in external demand over the summer, which aggravated  negative contribution of net exports to total GDP change, slowed industrial production growth (from ~14.3% in 2Q to ~12% in 3Q). At the same time, domestic demand saw clear signs of recovery as consumer demand picked up by a healthy 7.0% y-o-y (household demand by 7.5% and that of the public sector – by 4.2% y-o-y) vs. +3.4% y-o-y in 2Q (+5.1% and -0.7% respectively), while gross fixed capital formation was up 3.6% y-o-y vs. -5.7% y-o-y in 2Q. We expect real GDP growth to accelerate in 4Q10, as domestic demand is set to continue rebounding, while external demand was apparently in much better shape over the last months of the year (average metals export prices, for instance, were up 11% over October-November and are now only 3% below their recent peak at end-April). This, we expect, will bringing the full-year 2010 figure to +4.5% y-o-y (after -15.1% in 2009), while for 2011 we expect further acceleration to +4.7%.