UkrStat confirms 2.8% real GDP growth in 3Q18

Ukraine’s real GDP rose 2.8% yoy in 3Q18, or 0.4% qoq
on a seasonally adjusted basis, the State Statistics Service reported on Dec.
19, confirming its preliminary estimate released last month.
Real GDP growth was 3.8% yoy in 2Q18.

Private consumption surged 9.7% yoy in 3Q18,
accelerating from 4.2% yoy growth in the previous quarter. At the same time,
public consumption declined 6.7% yoy in 3Q18, slowing from a 11.2% yoy surge in
2Q18. Investment rose 9.7% yoy in 3Q18, slowing from 14.2% yoy growth in 2Q18.
The impact of net exports was negative with real exports declining 5.2% yoy and
real imports growing 5.1% yoy.

On the production side, the weaker GDP growth in 3Q18
was mostly due to slower value-added growth in agriculture (3.0% yoy in 3Q18
vs. 19.3% yoy in 2Q18) and manufacturing (1.0% yoy in 3Q18 vs. 2.0% yoy in
2Q18). Meanwhile, the contribution of trade (6.2% yoy growth) and construction
(8.7% yoy growth) to overall economic growth increased.

The GDP deflator amounted to 16.1% (vs. 17.0% in
2Q18).

Evgeniya Akhtyrko: The weak
performance of manufacturing – Ukraine’s largest production sector – dampened
overall economic growth. We expect GDP growth to have accelerated in 4Q18,
mostly due to better results in agriculture stipulated by a record-high grain
crop. Consumption will remain strong, but cooling investment and the negative
contribution of the external sector will restrain GDP growth.

Due to this weak manufacturing performance, GDP
growth is not likely to reach 3.3% yoy, as we initially expected. So we are
downgrading our estimate of 2018 GDP growth to 3.1% yoy.