Ukraine’s real GDP dropped 6.5% y/y in 1H20, deepening from estimated 5.9% y/y decline in 5M20, according to an estimate published on August 6 in the report of the Ministry of Economic Development. In 2Q20, GDP collapsed 11.0% y/y (down from 1.3% y/y drop in 1Q20), the ministry estimates. The estimate is based on the General Production Index (GPI), which takes into account the manufacturing results during the period.
In 1H20, GPI dropped 7.7% y/y, slightly deepening from a 7.6% y/y decline in 5M20, the ministry estimated. The ministry notes that the second quarter marked the most negative economic effects from the severe quarantine/lockdown. In June, the decline slowed down in some sectors of industrial production, transportation and construction. At the same time, agricultural production plunged 18.7% y/y in June because of set-aside land and lower yields.
"Our forecast of the 2Q20 GDP drop is close to the latest government estimate," Evgeniya Akhtyrko, an analyst at the Kyiv-based Concorde Capital brokerage, said in a research note. "We expect the economic decline to slow down in 2H20, with ongoing adverse effects from the global markets and the unfavourable investment environment in the country." "Our forecast is for Ukraine’s real GDP to drop 5.8% y/y in 2020 (vs. 3.2% y/y growth in 2019)," he added.