Ukraine’s GDP plunges 20.3% yoy in 1Q09

Yesterday, the State Statistics Committee announced that Ukraine’s GDP plunged 20.3% yoy in 1Q09. Agriculture and financial intermediation were the only sectors to show growth in 1Q09 in yoy terms, up 1.3% yoy and 27.5% yoy, respectively. On average, decline in services was moderate, compared to the fallback in manufacturing (-36.5% yoy) and construction (-54.1% yoy). Value added in trade fell 18.0% yoy, and in transportation & communication declined 14.4% yoy. While consumption shed only 11.6% yoy, investment nearly halved (-48.7% yoy) in 1Q09. On the other hand, government spending rose 1.8% yoy in real terms. Net exports imbalance narrowed to -3.6% of GDP, compared to -11.0% of GDP in 1Q08, thanks to the sharp hryvnya depreciation and the resulting plunge in imports. Andrii Parkhomenko: The data came with a 45-day delay, which had prompted speculation that the government tries to hide the real state of Ukraine’s economy. Nevertheless the number appeared to be closer to the optimistic edge of our forecast (we had expected GDP to fall in a range of 20-25% yoy in 1Q09), and slightly better than a -20.5% yoy consensus forecast published by Reuters. We maintain our 2009 forecast of change in real GDP at -12% yoy. We also think that in 2010 Ukraine’s economy will return to positive growth and will show a 4% yoy increase in GDP.