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UKRAINE - MACROECONOMIC SITUATION REPORT – DECEMBER 2018
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.,Tue, Jan 22, 2019
WASHINGTON, D.C. - The "Ukraine Macroeconomic Situation – December 2018" 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 the SigmaBleyzer multinational private equity firm, 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 December 2018 Macroeconomic Report Situation found in the attachment)
(1) The Martial Law imposed in 10 oblasts terminated on December 26th, paving the way for normalization of the presidential election campaign. As of January 15th, eight candidates were already registered, but many more are expected in the next few weeks. The election outcome is still quite uncertain as none of the candidates has more than 20% of support in recent polls and about one-third of the voting population is still undecided.
(2) Ukraine is proceeding with the creation of the High Anti-Corruption Court, a key international requirement for international support. A total of 113 candidates have presented applications for Court Judges, but the Public Council of International Experts, a foreign expert panel, has indicated that it wants to veto 47 of these candidates.
(3) Ukraine’s economic performance during 2018 exceeded original expectations, with a likely rate of GDP growth of 3.4%, according to estimates by the NBU. This would be Ukraine’s highest growth rate in seven years. This performance was achieved thanks to strong private consumption and capital investments.
(4) During 2018, the agricultural sector was the main economic driver, with an output growth rate of 8.2% yoy in January-November 2018. It was followed by construction output (6.3% yoy), retail trade (6.2% yoy), and passenger transportation (5.4% yoy.) On the other hand, industrial production increased by only 1.6% yoy.
(5) The consolidated fiscal budget had a surplus in November, expanding the cumulative consolidated budget surplus from the beginning of the year to UAH 22.0 billion (0.7 % of period GDP).
(6) Consumer inflation reached 9.8% in 2018, below 10% but above the target range of the NBU. Faster growth of consumer prices was the result of accelerated price growth of utilities, housing, foodstuffs, and communications.
(7) In the second half of November, the exchange rate depreciated due to Russia's aggression in the Azov Sea. Nevertheless, the exchange rate returned to about 27.7 UAH/USD by the end of December.
(8) Banking deposits and lending in Hryvnias expanded in November by 8.8% yoy and 12.7% yoy, respectively.
(9) The Ukrainian current account of the balance of payments had a deficit of USD 299 million (2.5% of GDP) in November 2018, which was covered by net financial account inflows of USD 1.6 billion. As a result, the overall balance of payments had a surplus of USD 1.3 billion and international reserves grew to USD 17.7 billion by early December. Disbursements from international loans brought reserves to USD 20.8 billion by the end of 2018.
NOTE: The entire Macroeconomic Situation Report for Ukraine for December 2018, with charts and graphs, can be found in the PDF Document by following the link below Ukr_Monthly_Ec_Report_December_2018.pdf