Talks with IMF finish on optimistic note; Steel output jumps in March; Unemployment rate at 8.8 percent; Government revises 2009 GDP;
Inflation slows in March.
Talks with IMF finish on optimistic note
Deputy Prime Minister Serhiy Tigipko will visit International Monetary Fund headquarters on April 24-25 to continue talks on restoring the Fund’s lending program to Ukraine. An IMF mission that visited Kyiv on March 24-April 2 described its trip in generally positive terms, noting hryvnia stability and “gradual resumption” of economic growth, but said the sides had yet to reach agreement on some fiscal policy issues.
Meanwhile, Prime Minister Mykola Azarov said after the Fund mission’s visit he expected the lending program to resume in May.
He added that Ukraine agreed to limit the gap in government finances this year to 6 percent of gross domestic product, or $8 billion, which was a key condition on the IMF’s part. Previously the authorities spoke of a 10 percent of GDP, or $13.5 billion, deficit ceiling which included the deficits of the central budget, the Pension Fund and oil and gas monopoly Naftogaz Ukrainy.
Steel output jumps in March
Steel production in Ukraine totaled almost 3 million tons in March, rising 28 percent in month-on-month and 19 percent in annualized terms on stronger foreign demand. First-quarter steel output thus rose an annualized 16 percent to 8 million tons. Industry experts forecast further production growth in April, to 3.2 million tons.
In more positive news for the sector, steel prices continued rising in March, beating analysts’ expectations, with hot rolled steel reaching $635/ton, almost double its price a year ago and up 30 percent since the beginning of the year. In terms of broader implications, the recent steel sector dynamics bodes well for Ukraine’s export revenues and as such is an important support factor for the hryvnia exchange rate.
Unemployment rate at 8.8 percent
Ukraine’s unemployment rate stood at 8.8 percent in 2009 under International Labor Organization methodology, changing marginally from 8.6 percent in January-September and 9.1 percent in January-June 2009, the State Statistic Committee said.
For comparison, Russia’s jobless rate was estimated at 8.9 percent last year. With the Ukrainian economy continuing to recover, analysts expect its unemployment rate to continue declining in 2010, averaging 8.0 percent for the full year.
Government revises 2009 GDP
The State Statistics Committee marginally revised its GDP estimate for 2009, worsening the rate of decline in real terms by 0.1 percentage points to -15.1 percent. The government committee also revised last year’s nominal GDP up 0.2 percent to Hr 914.7 billion ($117.3 billion).
Inflation slows in March
Consumer prices in Ukraine rose 0.9 percent in March, decelerating from 1.9 percent growth in February and 1.8 percent in January. In annualized terms, inflation slowed to 11 percent last month from 11.5 percent in February. Food prices continued to power domestic consumer price growth, increasing 1.3 percent last month.
Weaker sugar prices and the marginal decrease in meat prices on the back of lower demand caused by pre-Easter fasting were offset by growth in prices for eggs, bread, milk, fruits and other foodstuffs. Rising transportation fees, fueled by higher gasoline prices, also added to March inflation.
For comparison, inflation dropped to an annual 6.5 percent in Russia and 2.6 percent in Poland last month.
