UKRAINE - MACROECONOMIC SITUATION REPORT – JANUARY 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., Mon, Feb 18, 2019
WASHINGTON, D.C. - The "Ukraine Macroeconomic Situation – January 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 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 January 2019 Macroeconomic Report Situation found in the attachment)
- As of February 10, the Central Election Committee registered 44 candidates for the Presidency. According to the latest electoral polls, the list of top 3 candidates includes (i) comedian and actor Volodymyr Zelenskiy, (ii) former Prime Minister Yulia Tymoshenko, and (iii) President Petro Poroshenko. All major polls suggest that the election will require two rounds, since none of the candidate will be able to get “50%+” votes in the first round.
- In January, Ukrainian Cabinet of Ministers issued a resolution, which would introduce monetization of communal subsidies for natural gas consumption. It should improve the situation in the sector and stimulate increase in energy efficiency in Ukrainian households. This measure was supported by the new Stand-by arrangement with the IMF.
- The State Statistics Service reports that the Ukrainian economy accelerated to 3.4% yoy in the fourth quarter of 2018, compared to a growth rate of 2.8% in the third quarter. This acceleration allowed GDP growth to reach about 3.3% yoy for the year as a whole, the best performance since 2012. The main growth driver was agricultural production, which expanded by 7.8% yoy, followed by retail trade (6.1% yoy), and construction (4.4% yoy).
- The cumulative consolidated fiscal budget deficit for 2018 amounted to UAH 67.8 billion (about 1.9% of GDP), which is below the limit agreed with the IMF.
- Consumer inflation decelerated to 9.8% yoy in 2018 as compared to 13.7% yoy in 2017. The major reasons for lower inflation were the strict monetary policy of the NBU (which raised the policy rate six times since October 2017), expansion of domestic supply of several foodstuffs, and lower world prices of foodstuffs.
- Commercial banks increased their portfolio of Hryvnia deposits of the corporate sector as well as of households in December. However, growth of foreign currency deposits slowed down mainly because of the decline in foreign currency corporate deposits. Growth of Hryvnia loans to household remained high at 31.4% yoy.
- The UAH/USD exchange rate depreciated during the first ten days of January, but appreciated at moderate pace during the last 20 days of January and almost reached the level at which it started the month at 27.8 UAH/USD.
- During 2018, Ukraine’s current account deficit reached USD 4.7 billion (3.7% of GDP), compared to USD 2.4 billion in 2017. This deficit was fully covered by net financial inflows, with the result that the overall balance of payments generated a surplus of USD 2.9 billion. Ukrainian international reserves increased to USD 20.8 billion, which are enough to cover 3.4 months of imports.
NOTE: The entire Macroeconomic Situation Report for Ukraine for January 2019, with charts and graphs, can be found in the PDF Document by following the link below