Ukraine GDP grows a mere 1.8% yoy in 1Q12

Ukraine’s GDP grew 1.8% yoy in 1Q12, according to UkrStat. In seasonally-adjusted terms, GDP was down 0.3% qoq.

Vitaliy Vavryshchuk: The 1Q12 GDP growth data was in line with the most pessimistic estimate submitted for Bloomberg consensus forecast (median and average both stood at 2.9%). While a GDP breakdown by components is not available yet, we think weak economic growth was mainly due to unfavorable external markets, which likely pushed real export growth into negative territory last quarter. Previously released industrial production data clearly indicated export-oriented industries, metallurgy foremost, are experiencing declines in year-on-year terms. Private domestic consumption has remained the only powerful driver of GDP expansion thus far, as real wages continue to grow at a double digit pace on multi-year low inflation. We do not rule out that 2Q12 GDP growth might turn negative, but for the moment we maintain our 2012E economic growth projection at 1.9% yoy as we hope external markets and Ukraine’s exports improve in 2H12.