UKRAINE - MACROECONOMIC SITUATION REPORT – FEBRUARY 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, Feb 24, 2020
WASHINGTON, D.C. - The "Ukraine Macroeconomic Situation – February 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 February 2020 Macroeconomic Report Situation found in the PDF document: SB_Ukr-Monthly_Ec_Report_February_2020.pdf
- On February 18th, Russian-led forces in eastern Ukraine launched several intense attacks, killing one Ukrainian soldier and injuring four others. President Zelenskyy said that this offensive was an attempt to disrupt the peace process and will not change his plan to end the war.
- During January, the Rada continued work on legislation related to the introduction of land market reform. It is now expected that the legislation will be voted at the end of March. It envisages that all government land will be privatized and the moratorium for land sale will be removed. The current draft assumes that the maximum land lot will be 10,000 hectares and foreigners will not be allowed to buy Ukrainian land until a special referendum.
- The IMF mission arrived to Kyiv on February 20 for “technical discussions”. A key IMF demand is Rada approval of a law to ban the return of nationalized banks to their previous owners.
- The most recent data from the State Statistics Service showed that economic growth slowed down to 1.5% yoy in the fourth quarter of 2019, which may lead to a GDP growth rate of 3.3% for 2019. The slowdown was caused by lower agricultural, industrial and energy output, and despite good performance of construction and retail trade.
- The cumulative consolidated budget deficit for 2019 was at UAH 84.3 billion or around 2.4% of GDP, which lies within the limits agreed upon with the IMF.
- Consumer inflation further decelerated in December lowering it below the medium-term target. The all items index decreased by 1.0 percentage point to 4.1% yoy, which was the lowest level since April 2014.
- Banking deposits continued to expand in December, while bank lending activities continued to be sluggish.
- During January 2020, the UAH/USD exchange rate was on the depreciatory path, depreciating by 5.7% to around 25.04 UAH/USD by the end of the month.
- In 2019, Ukraine’s current account deficit declined by 75.5% yoy to USD 1,072 million (0.7% of GDP), compared to USD 4,367 million in 2018. Ukrainian financial account net inflow amounted USD 7,005 million. Therefore, the overall consolidated surplus of the balance of payments amounted to USD 5,971 million. This surplus increased international reserve to USD 25,302 million, enough for 3.8 month of imports.