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UKRAINE - MACROECONOMIC SITUATION REPORT – OCTOBER 2019
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., Wed, October 16, 2019
WASHINGTON, D.C. - The "Ukraine Macroeconomic Situation – October 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: (the entire October 2019 Macroeconomic Report Situation found in the PDF document: SB_Ukr_Monthly_Ec_Report_October_2019.pdf)
- ϖ During its first month, the new government made progress in advancing its reform agenda. It introduced draft laws to end parliamentary immunity from criminal prosecution; to enact the Concessions Law for the private operation of ports, airports, and roads; to seek a conservative fiscal budget with a low deficit of 2.1% of GDP; and to advance the de-shadowization of the Ukrainian economy by introducing mandatory cash registers for all entrepreneurs. Nevertheless, two developments lessened the progress made by the government. First, the country was involved in the controversy about the calls between Presidents Trump and Zelenskyy, which led to the ongoing impeachment inquire against President Trump. Second, the IMF mission that visited Ukraine in September to review the possibility of a new Extended Fund Facility left the country without signing a staff-level agreement, dealing the government a setback in efforts to obtain prompt financial support.
- ϖ In the second quarter of 2019, Ukraine’s GDP grew by 4.6% yoy, compared to 2.5% yoy in the first quarter of the year. The mayor sources of GDP growth were gross capital formation (7.9% yoy growth rate), and household consumption (11.8% yoy). More frequent monthly output data show that economy recovery is still ongoing.
- ϖ The overall fiscal budget situation continues to be satisfactory, with a consolidated surplus of UAH 35.4 billion in January-August (about 1.4% of period GDP).
- ϖ Consumer inflation saw some deceleration in August, with the index dropping 0.3 percentage points to 8.8% yoy.
- ϖ In the banking sector, growth of Hryvnia bank deposits accelerated to 10.4% yoy, while foreign currency deposits grew by 10.5% yoy. Bank lending activities posted sluggish performance in August, with Hryvnia loans increasing only by 1.5% yoy and foreign currency loans declining.
- ϖ In September, the UAH/USD exchange rate appreciated by 3.2% to around 24.36 UAH/USD by the end of the month, thanks to foreign exchange inflows by non-residents to purchase government securities.
- ϖ In August 2019, Ukraine's current account deficit grew by 42.6% yoy to USD 512 million, compared to USD 359 million in August 2018. The deficit was fully covered by USD 639 million of financial inflows (principally from foreign direct investments and trade credits). The overall balance of payments had a surplus of USD 130 million, increasing international reserves to USD 21,437 million at the end of August 2019.
The entire October 2019 Macroeconomic Report Situation found in the PDF document: SB_Ukr_Monthly_Ec_Report_October_2019.pdf