Ukraine central bank improves 2017 GDP forecast to 2.8%

Ukraine’s central bank revised its 2017 GDP forecast to 2.8% yoy from 2.5% yoy previously and lowered its 2018 estimate to 3.0% yoy from 3.5% yoy previously, its website reported on Jan 26. The central bank estimates 2016 GDP rose 1.8% yoy, without having yet received the 4Q16 figures.

Alexander Paraschiy: From the data available so far, 2016 GDP growth is likely to exceed expectations, which in turn likely influenced the central bank to improve its 2017 forecast. In December, state statistics revealed a surge in agri-production  of 66.4% yoy and accelerating industrial output of 4.5% yoy.

It’s worth considering, however, that the agri-surge is likely the result of revisions to the grain harvest, while industry improved owing to higher utility output amid cold weather. Therefore, we still do not see evidence of sustained growth. Against this backdrop, the central bank’s revision looks a bit hasty to us. So far, we are keeping our 2017 projection at 2.1% GDP growth.