News
11.01.2010
Ukraine's Q3 2009 GDP Confirmed, Q/Q Growth Possible
Ukraine's State Statistics Committee has published detailed results for third-quarter GDP, thereby confirming the provisional estimate of a real GDP decline equal to 15.9% year-on-year (y/y). The pace of decline in y/y terms thus slowed from 20.3% and 17.8% in the first and second quarters respectively, signalling that a recovery has already ensued if quarter-on-quarter (q/q) comparison is employed. Indeed, the National Bank of Ukraine had noted earlier that the economy grew by 2.9% q/q, seasonally adjusted, in the third quarter. However, this was largely due to the fact that imports fell even more drastically than exports, while there was barely any significant stimulus at all from domestic demand.
Quite in contrast, the government, being cash-strapped due to the surging budget deficit and having to comply with International Monetary Fund (IMF) conditions, scaled down public consumption by 12.8% y/y (non-adjusted) in the third quarter, while the decline of private consumption steepened as well; the latter fell 13.9% y/y following -11.6% in the first and second quarter. On another note, the Statistics Committee has published the quarterly labour market survey, which remarkably signalled a decline in unemployment in the third compared to the second quarter. The year-to-date average unemployment for January-September 2009 equalled 8.6%; this is clearly higher compared to a year ago (6.5%), but already lower compared to the first half of 2009 (9.1%). Although seasonal factors have played a role, too, the relatively low job loss during the recession so far hints that the need to cut labour costs is not as severe as the output downturn suggests, or that labour costs are trimmed mainly by cutting wages, or that the production downturn is overstated. However, from a pre-crisis level of almost 20 million jobs, roughly one million has been lost.
Significance:Ukraine's economy has stabilised further during the third quarter, but the crisis is far from over. Quarter-on-quarter growth was more a rebound from an extremely low output level and has not been transformed into a genuine recovery so far. The political crisis in the country and uncertainties over IMF support have impaired a recovery more than anything else. We maintain our view that a true recovery may not commence before the second half of 2010.
Global Insight
