Ukraine’s real GDP increased by 5.7% year on year in 2Q21, the State Statistics Service reported on September 20, improving its preliminary estimate of 5.4% y/y. Meanwhile, the economy declined 0.7% quarter on quarter on a seasonally adjusted basis (vs. a previously reported decline of 0.8% q/q).
Ukraine's nominal GDP amounted to UAH1,169bn ($42.4bn) in 2Q21, which is 33.7% more y/y. The GDP deflator amounted to 26.4% in 2Q21.
GDP growth was mostly driven by private consumption, which advanced 17.4% y/y in 2Q21. In addition, gross fixed investment picked up 14.8% y/y. Public consumption inched up 2.9% y/y. At the same time, the contribution of external trade was negative with real exports plunging 6.2% y/y and imports surging 21.5% y/y.
On the production side, economic advancement was mostly due to the growth in manufacturing (8.2% y/y), financial and insurance services (17.8% y/y) and transportation (9.6% y/y). At the same time, the value added dropped in agriculture (-10.6% y/y), public administration (-4.7% y/y), and electricity & gas supply (-1.9% y/y).
“Given the huge economic downfall in 2Q20 (-11.2% y/y), the GDP growth of 5.7% y/y in 2Q21 is not impressive, meaning that the country's output is still below the pre-pandemic level. The recovery in investment is not enough to cover the fall of the previous year. Exports look quite impressive in money terms, but a high respective deflator (58.9%) turned the real result to the red,” Evgeniya Akhtyrko of Concorde Capital said in a note. “The slow recovery of Ukraine’s economy after the pandemic crisis indicates its overall structural weakness and low resilience to shocks. We are observing mid- and long-term effects of the havoc wreaked by the pandemic, which brought the disruption of many economic liaisons and the failure of auxiliary businesses. We still expect Ukraine’s economy will increase 4.1% y/y in 2021 (vs. a 4.0% y/y decline in 2020).”