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UKRAINE - MACROECONOMIC SITUATION REPORT – AUGUST 2019
ANALYTICAL REPORT: by Oleg Ustenko, Djulia Segura, Valentyn Povroznyuk, Edilberto L. Segura
SigmaBleyzer private equity investment management firm & The Bleyzer Foundation (TBF), Kyiv, Ukraine
Published by U.S.-Ukraine Business Council (USUBC),
Washington, D.C., Thu, August 8, 2019
WASHINGTON, D.C. - The "Ukraine Macroeconomic Situation – August 2019" analytical report with several charts and graphs IS ATTACHED to this communication and can be found at the link below. The monthly Macroeconomic Situation report is prepared by SigmaBleyzer, www.SigmaBleyzer.com, and The Bleyzer Foundation (TBF), www.BleyzerFoundation.org, Kyiv, Ukraine, who are long-time members of the U.S.-Ukraine Business Council (USUBC), http://www.USUBC.org.
EXECUTIVE SUMMARY: (entire August 2019 Macroeconomic Report Situation found in the PDF document: SB_Ukr_Monthly_Ec_Report_August_2019.pdf)
1) President Zelenskiy’s Party, Servants of the People, was able to secure 254 positions in the new Parliament, giving it a majority. The Opposition–For Life Party got 43 positions, Batkivschyna Party - 26 positions, European Solidarity Party - 25 positions, Holos Party - 20 positions, and Opposition Party - 6 positions. With a clear majority, Servants of the People will be able to appoint a Cabinet of Ministers by early September.
2) In the first quarter of 2019, Ukraine’s GDP grew by 2.5% yoy. On the production side of GDP, the highest rates of growth took place in construction activities (with 26.8% yoy expansion). On the expenditure side, the highest growth took place in household consumption (10.7% yoy), supported by strong growth of wages, remittances from abroad, increases of pensions and social transfers, and increases in bank lending. In June 2019, Ukraine’s agriculture production expanded by 12.2% yoy while retail trade turnover increased by 13.6% yoy.
3) Despite a small fiscal budget deficit in June 2019, the overall fiscal budget situation continues to be satisfactory. The cumulative fiscal budget surplus from January to June amounted to UAH 21.0 billion (1.1% of period GDP).
4) Consumer inflation declined in June, with the all items index dropping 0.6 percentage points to 9.0% yoy.
5) Banking deposits posted a good performance in both national currency and foreign currency sectors in June. Growth of national currency deposits accelerated by 2.9 percentage points to 8.5% yoy while foreign currency deposits denominated in USD increased for the first time in 14 months with a growth of 2.3% yoy. Bank lending activities also posted improvements in June with a growth of 4% yoy.
6) The UAH/USD exchange rate appreciated by 4.2% in July. This appreciation was mainly supported by active sales of dollar by non-residents to finance purchases of Ukrainian domestic sovereign bonds denominated in hryvnia with profitability of at least 18%.
7) In June 2019, Ukraine’s current account of the balance of payments had a deficit of USD 432 million (compared to a deficit of USD 126 million in June 2018). This deficit was fully covered by financial inflows which reached USD 1,640 million in June 2019. These financial inflows were caused principally by portfolio investments, which amounted to USD 1,718 million in June. As result, the overall surplus of Ukraine's consolidated balance of payments amounted to USD 1,210 million in June 2019. This led to an increase in international reserves to about USD 20.6 billion, sufficient to finance imports for 3.3 months.
NOTE: The entire Macroeconomic Situation Report for Ukraine for August 2019, with charts and graphs, can be found in the PDF Document: SB_Ukr_Monthly_Ec_Report_August_2019.pdf