Ukraine GDP drops 3.5% in 3Q20, based on revised data

Ukraine’s real GDP
plunged 3.5% yoy in 3Q20 to UAH 1,157 bln (USD 41.9 bln), improving
from a 11.4% yoy plunge
in 2Q20, the State Statistics Service reported on Dec. 21,
confirming its preliminary estimate.
The economy grew 8.5%
qoq seasonally adjusted (after dropping 9.7% qoq in 2Q20).

The economy was
weighed down by a gross fixed investment plunge of 23.8% yoy
in 3Q20 (vs. a 22.3% yoy
drop in 2Q20). At the same time, private consumption inched up 1.0% yoy (vs. a
10.4% yoy plunge in 2Q20). In addition, public consumption advanced 8.2% yoy
(vs. a 1.7% yoy drop in 2Q20). Real exports slid 7.2% yoy, while imports fell
10.1% yoy.

On the production
side, the economy was mostly affected by falls in (1) agriculture of 11.1% yoy
in 3Q20 (vs. a 29.1% yoy
decline in 2Q20), (2) manufacturing of 5.6% (vs. 14.7 yoy drop in 2Q20) and (3)
transportation of 8.4% yoy (vs. a 14.7% yoy drop in 2Q20). At the same time, construction
picked up 8.2% yoy (vs. a 6.2% yoy decline in 2Q20), while trade advanced 9.7%
yoy (vs. a 5.6% yoy drop in 3Q20).

The GDP deflator
amounted to 7.9% in 3Q20 (vs. 5.0% in 2Q20).

Evgeniya Akhtyrko: The growth of private consumption
has quickly restored itself, driven by a growth of real personal income. In
addition, public consumption was prompted by increased public spending amid a
growing budget deficit. At the same time, investment remains highly depressed,
reflecting low business confidence in the country.

We expect the
decline of Ukraine’s economy to slow down further in 4Q20 amid the continuing
growth of private and public consumption. We expect Ukraine’s GDP to lose 4.6%
yoy in 2020 (vs. 3.3% yoy growth in 2019). In 2021, we expect the economy will bounce to 3.9% yoy
growth.