Ukraine GDP drops 1.3% in 1Q20, based on revised data

Ukraine’s real GDP dropped 1.3% yoy in 1Q20, or 0.7%
qoq on a seasonally adjusted basis, to UAH 845.8 bln (USD 33.8 bln), the State
Statistics Service reported on June 19, adjusting upward its preliminary
estimate of 1.5% yoy, or a 0.8% qoq decline
from 1.5% yoy growth in 4Q19.

The economy was weighed down by gross fixed
investments plummeting 21.4% yoy. Private consumption advanced 8.1% yoy, but
public consumption fell 9.7% yoy. Real export growth climbed to 0.9% yoy, while
imports declined to 4.0% yoy growth. However, the contribution of net exports
to GDP remained negative, as the nominal volume of imports exceeded volume of
exports.

On the production side, the value added in most
sectors of Ukraine’s economy declined in 1Q20. In particular, manufacturing
declined 4.3% yoy, agriculture dropped 1.8% yoy, construction slid 4.3% yoy,
transportation fell 8.6% yoy. Meanwhile, value added in trade improved 5.4% yoy

The GDP deflator amounted to 5.1% 1Q20.

Evgeniya Akhtyrko: These
figures reveal Ukraine’s economy deteriorated substantially well before it had
been affected by the corona crisis. The investment plunge in 4Q19 and 1Q20 was
the result of the growing turmoil at the global markets, as well as a higher
risk assessment of the domestic economy amid the failed expectations of a fast
improvement of the business climate under the Zelensky administration.

We expect the economic downfall to have deepened
further in 2Q20 as this period fully absorbed all the negatives related to the
quarantine measures, both in Ukraine and its trading partners. Our forecast is
for Ukraine’s GDP to drop 5.8% yoy in 2020 (vs. 3.2% yoy growth in 2019).