GDP up 6 percent in second quarter
Ukraine’s gross domestic product advanced by 6 percent in the second quarter of 2010 from the same period a year ago, accelerating from 4.9 percent growth in January-March, according to provisional estimates from the State Statistics Committee. Ukraine’s second-quarter economic expansion was likely one of the fastest in the Central and Eastern European region. However, its growth in the first half of the year, estimated at 5.5 percent, fell below earlier
government and central bank estimates of 6.2-6.4 percent. According to the latest monthly analyst poll published by international survey organization Consensus Economics, Ukraine’s economy will expand by 4.2 percent in 2010 and 4.4 percent in 2011. Forecasts from the International Monetary Fund are less optimistic, projecting growth of 3.7 percent in 2010 and 4.3 percent next year.
Industrial output growth decelerates
Industrial output in Ukraine rose by 2.9 percent in July from the month before, decelerating in year-on-year terms to 6.4 percent and bringing its growth in the first seven months of the year to 11.1 percent. Metallurgical output inched up by 1 percent on the month in July after sliding 11 percent in June, reflecting some stabilization in foreign demand. However, measured against July 2009, metallurgical production dropped 6.5 percent due to a higher comparison base. Other industries performed better last month, with machine-building output surging 38 percent from the same period in 2009 thanks to robust demand from Russia and other CIS countries. Production in the chemical sector, another export-oriented industry, rose by 17 percent, while domestically oriented food producers reported a more modest increase of 5 percent, indicating domestic economic recovery remains reliant largely on foreign demand.
Government approves 2011 macroeconomic forecast
The cabinet of ministers approved its macroeconomic forecast for 2011, projecting real GDP growth of 4.5 percent, average inflation of 10.8 percent and an average exchange rate of Hr 7.95 to the U.S. dollar. The cabinet also projected a general government deficit of 3.5 percent of GDP (this is an aggregate estimate of the deficits of the state budget, pension fund and oil and gas monopoly Naftogaz Ukrainy), exactly in line with International Monetary Fund requirements. The government will use these parameters to draft the state budget for 2011. The document is to be submitted to parliament by September 15.
Government mulls grain export quotas
The government is expected to decide on Aug. 25 whether to impose quotas on exports of wheat and barley from the country. Current plans call for limiting grain exports between September and December 2010 to 2.5 million metric tons. This volume apparently does not include 1 million metric tons of grains already delivered to Ukrainian sea ports for loading and shipment abroad. Also, corn exporters will likely face no restrictions at all. The government started considering limitations on grain exports after Russia banned grain shipments abroad until the end of the year due to a record drought. U.S. wheat futures surged in July on concern about falling exports from the Black Sea region before retreating in the past two weeks. Ukraine accounted for 7 percent and Russia for 14 percent of global wheat exports last year, or 9 million metric tons and 18 million metric tons, respectively. This year’s grain harvest in Ukraine is estimated at 40-42 million metric tons, including some 17 million metric tons of wheat. The country consumes about 12 million metric tons of wheat annually, meaning it could export 5-6 million metric tons in the coming season if the latest harvest forecasts prove correct. The country shipped over 1 million metric tons of wheat in July and the first half of August, according to Agriculture Ministry data.
