Ukraine GDP rises 2.5% in 1Q17

Ukraine’s 1Q17 GDP rose 2.5% yoy owing to impressive growth of investments in fixed assets (20.1% yoy) and improving private consumption (2.6% yoy), the State Statistics Service reported on June 19. Government consumption also was in the black with 4.2% yoy growth. Net exports contributed negatively (-2.1pp) with real exports falling 0.4% yoy as real imports rose 2.9% yoy. Nominal GDP reached UAH 584 bln. 

Alexander Paraschiy: The economy keeps exceeding expectations. We projected 1.2% GDP growth in 1Q17 while it grew twice as fast, owing to improving investment and reviving consumption. Sharply narrowed net exports also helped a lot this time around. However, this doesn’t mean that we have higher expectations for 2017 growth, largely because of the widening trade deficit that we are already observing in 2Q17.

Private consumption will be on the rise and internal investments are likely to keep growing in the double digits. However, the external account balance promises to worsen on the back of sliding resource prices and trade blockade consequences, with a subsequent increase in negative net exports. We expect GDP growth to slow in the following quarters and we maintain our 2017 projection of 1.9% yoy growth.