Cetral bank estimates 15% decline in Ukraine GDP in 1Q15

The National Bank of Ukraine (NBU) has estimated a 15% yoy real GDP decline in 1Q15 vs. -14.8% in 4Q14, according to a report released  on Apr. 2. The NBU anticipates GDP decline slowing to 10.2% yoy and 5.7% yoy in 2Q15 and 3Q15, resepctively. Finally, there are some positive results expected. The 4Q15 should show a 2.0% yoy GDP increase, according to the report. The NBU expects full-year 2015 GDP to decline 7.5% yoy.

Alexander Paraschiy: The National Bank’s estimate of 1Q15 appears to be somewhat worse than our forecast (we projected -13.4% yoy). At the same time for the second quarter the National Bank estimate is in line with our projections. The main uncertainty is related to the second half of the year. So far we are more optimistic about GDP statistics in 2H15 forecasting near 1% yoy decline  July-December 2015 due to a low comparative base (two-digit industry decline started from July 2014, when military actions in Donbas intensified). However, against the backdrop of extreme volatility that Ukraine is facing at the moment, with equal probability we may see much worse or much better results in 2H15.

So far, we project a 5.7% decline in Ukarine’s real GDP in 2015 assuming an almost flat agro-production performance and an industry bottom out from July. Clearly, such a forecast is based on an assumption that there will be no escalation in Ukraine’s easternmost regions.