GDP drops 16 percent from January-July Ukraine's gross domestic product, when adjusted for inflation, plunged by more than 16 percent in the first six months on a yearly basis, the Economy Ministry reported on Aug. 11. Because the economy ministry expects stronger economic results in August-December, annual GDP will decline by 8.9 percent, investment bank Concorde Capital said in an emailed note.
Government releases economic scenarios
Ukraine’s economy should see 2 percent growth next year as a baseline scenario, according to the Economy Ministry, with further increases by 3-4 percent in 2017-2019.
No assumptions were provided for the hryvnia exchange rate.
Used to plan next year’s budget, the forecasts see annual inflation at 12 percent by December 2016, with real wages growing by 2.3 percent.
The nation’s economy may shrink by 0.3 percent annually, according to the ministry’s worst-case scenario, with inflation standing at 14.7 percent.
“We believe that the government’s assumptions are mostly realistic, though the best-case scenario is slightly optimistic,” Empire State Capital said in an emailed note. “The assumptions also allow expecting a more or less real and balanced government fiscal plan for 2016.”
Early grain harvest at 36 million tons
As of Aug. 12, Ukraine harvested 2 million more tons of grain that the same period a year ago on 10 million hectares of land, the Agricultural Ministry reported. Having collected 36 million tons so far, the figures imply an average yield of 3.6 tons per hectare, Dragon Capital said in an emailed note to investors. Crops included winter wheat collected from 6.7 million hectares, barely harvested from 2.8 million hectares, and rapeseel from 671,000 hectares.
“With dry weather prevailing in Ukraine in recent weeks, the pace of harvesting outperformed last year’s in volume terms,” Dragon Capital wrote. “We currently forecast the 2015 grain harvest at 60.5 million tons, 5 percent year-on-year, close to the Agriculture Ministry’s estimate of 60 million tons.”
Russia to ban Ukrainian food over EU trade deal
Russian Prime Minister Dmitry Medvedev on Aug. 13 signed a decree that would ban the import of all agricultural products, raw materials and food from Ukraine should a free-trade deal with the European Union go fully into effect on Jan. 1 as foreseen by their bilateral Association Agreement.
Also in included in the government decision were Albania, Montenegro, Iceland and Liechtenstein.
“This decision is aimed at distribution of special economic retaliation to the individual states to the extent of their involvement in the sanctions regime against the Russian Federation,” reads a Russian government statement.
According to Kostiantyn Yelisieiev, Ukraine’s envoy to the European Union, Russia has proposed to postpone when the economic terms of the association agreement go into effect until Jan. 1, 2017, Dzerkalo Tyzhnia newspaper reported.
Ukraine to get its own coal through Russia
Energy Minister Volodymyr Demchyshyn said Ukraine’s thermal power plants it will receive anthracite coal mined in occupied Donbas through Russia, according to Concorde Capital.
Anthracite coal is not produced outside the occupied territory and only mines belonging to Rinat Akhmetov’s DTEK officially mine it in Donbas. Seven out of the nation’s 14 thermal power plants are designed to burn this type of coal, including four outside of Donbas, the investment bank reported.
“If the deliveries are successful, DTEK’s mines could supply 3.5-4.5 million metric tons of anthracite coal from the occupied territories by the end of 2015, we estimate,” said Concorde’s Alexander Paraschiy. “This would allow anthracite-burning power plants to get smoothly through the heating season, when their electricity supply is critical for Ukraine’s power system.”
In June, Demchyshyn noted that before the start of the next heating season, Ukrainian thermal power plants had to stockpile about 2.5 million tons of coal, of which 1 million is anthracite coal, UNIAN news agency reported.
Kyiv Post editor Mark Rachkevych can be reached at [email protected].
