Ukraine GDP plunges 11.4% in 2Q20, based on revised data

Ukraine’s real GDP plunged 11.4% yoy in 2Q20, or 9.9%
qoq on a seasonally adjusted basis, to UAH 867.7 bln (USD 32.2 bln),
accelerating from 1.3% yoy decline in 1Q20, the
State Statistics Service reported on Sept. 18, confirming its preliminary estimate.

The economy was weighed down the most by a 10.4% yoy
decline in private consumption (vs. 8.1% yoy growth in 1Q20). Public
consumption slid 1.7% yoy (vs. a 9.7% yoy drop in 1Q20). In addition, gross
fixed investments plummeted 22.3% yoy (accelerating from a 21.4% yoy decline in
1Q20). Real exports slid 9.0% yoy, while imports fell 23.4% yoy.

On the production side, the value added in all sectors
of Ukraine’s economy declined in 1Q20. In particular, manufacturing dropped
14.7% yoy, agriculture plummeted 29.1% yoy, and transportation fell 14.7% yoy.
Meanwhile, the least affected sectors included trade (-5.6% yoy), information
and telecommunication (-4.2% yoy), and construction (-6.2% yoy).

The GDP deflator amounted to 5.0% in 2Q20 (vs. 5.1% in
1Q20).

Evgeniya Akhtyrko: The severe
quarantine/lockdown restrictions – which were in place for most of 2Q20 –
resulted in private consumption plummeting. The decline in investment
accelerated amid the turmoil at the global markets related to the corona crisis
and the reduced economic activity related to the quarantine restrictions.

We expect the economic decline to slow down in 2H20,
though with ongoing adverse effects from the global markets and the unfavorable
investment environment. In the optimistic scenario, if the government doesn’t
resort to strict nationwide quarantine restrictions amid the recent records in COVID-19
infections, Ukraine GDP might conclude the year at around a 5% yoy drop (vs.
3.2% yoy growth in 2019).