Ukraine GDP drops 1.2% yoy in 1Q20, estimates show

Ukraine’s GDP dropped 1.2% yoy in 1Q20, according to
an estimate published on May 12 in the monthly economic report of the Ministry
of Economic Development. The ministry had expected GDP to decline 0.9% yoy in
1Q20. The estimate is based on the General Production Index (GPI), which is
based on the manufacturing results during the period.

In 1Q20, GPI dropped 3.8% yoy, deepening from a 1.8%
yoy decline in 2M20, the ministry estimated. The deeper drop was partially due
to a high comparative base effect. In addition, the March results reflected the
negative effect of the coronavirus pandemic.

Evgeniya Akhtyrko: The 7.7% yoy industrial output drop
in March was the main factor in GDP falling. Declines in construction and
agriculture also deepened in March.

We expect the economic downfall to deepen further in
2Q20 as this quarter will fully absorb all the negatives related to the
quarantine measures, both in Ukraine and its trading partners. Our forecast is
for Ukraine’s GDP to drop 4.5% yoy in 2020 (vs. 3.2% yoy growth in 2019).