Ukraine GDP rises 1.8% in 3Q16

Ukraine’s GDP rose 1.8% yoy in 3Q16, according to state statistics reported on Nov. 14. This implies it increased about 1.2% yoy in 9M16. The IMF projected 1.5% GDP growth for 2016 while Ukrainian authorities anticipate 1.0% growth.

Alexander Paraschiy: The 3Q16 growth exceeds our expectations and so far it’s not clear what might have been responsible amid the sharp widening in the trade deficit and slow consumption recovery, which are tendencies that we predicted. However for 4Q16, we expect the real sector to slow down owing to a higher comparative base. The GDP decline in 4Q15 of -1.4% yoy was much less than previous quarters that year (-7.2% yoy in 3Q15, -14.7% in 2Q15 and -17.0% yoy in 1Q15). Further expansion of the trade deficit (on the back of energy imports) will also support the slowing trend in 4Q16.

Ultimately, the better 3Q16 GDP performance might translate into a stronger 2016 GDP result of more than 1.0% yoy. However, in light of volatility of the economy, we still expect GDP growth at 0.9% yoy, which we initially estimated.