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UKRAINE - MACROECONOMIC SITUATION REPORT – JANUARY 2020
ANALYTICAL REPORT: by Oleg Ustenko, Julia 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 21, 2020
WASHINGTON, D.C. - The "Ukraine Macroeconomic Situation – January 2020" analytical report with several charts and graphs 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: (the entire January 2020 Macroeconomic Report Situation found in the PDF document: SB_Ukr_Monthly_Ec_Report_January_2020.pdf
- A major positive event at the end of 2019 was the finalization of the contract with Gazprom for the transportation of Russian gas through Ukraine. The gas transit contract is for 5 years. It should ensure normal work of the Ukrainian gas transportation system, and exclude major risks for energy supply to the various regions of the country. Moreover, Gazprom transferred to Ukraine USD 3 billion due under the Stockholm Arbitration Institute's decision on the gas transit litigation.
- At the end of December, Ukrainian prisoners of war and civilians arrested by the pro-Russian militants in Donbas returned to Ukraine, as agreed at the Normandy summit in Paris on December 9.
- The most recent data for November show that economic growth may have slowed down in the fourth quarter of 2019, which may lead to a GDP growth rate of 3.6% for 2019. In fact, in November 2019, Ukrainian's agricultural output declined by 18.5% yoy, comparing to the same month of the previous year. Similarly, Ukrainian industrial sector continued its weak performance of the previous months, with an output decline of 7.5% yoy.
- The consolidated fiscal budget was in deficit in November. The cumulative consolidated budget deficit from the beginning of the year increased to UAH 6.8 billion in January-November (about 0.2% of period GDP).
- Consumer inflation sustained a significant drop in November. The all items index decreased by 1.4 percentage points to 5.1% yoy on the back of strict monetary policy and further hryvnia strengthening.
- Banking deposits expanded at accelerated pace in November. National currency deposits increased by 16.9% yoy, while that of the foreign currency deposits denominated in USD increased by 19.2% yoy. However, bank lending activities continued to be sluggish in November.
- In December, the UAH/USD exchange rate appreciated during the month. Appreciation resulted from increased inflow of dollar from non-residents (who continued purchasing sovereign bonds denominated in Hryvnias).
- In November 2019, Ukraine’s current account had a surplus of USD 57 million, thanks to a growth of 43.7% yoy (to USD 714 million) of net primary income (principally compensation of employees). Together with financial inflows of USD 544 million in November, the overall balance of payments had a surplus of USD 601 million, increasing international reserves to USD 25.3 billion.