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You're reading: Economy showing strong growth?

Azarov says GDPrebounding, but global slowdown could hit economy hard.

Prime Minister Mykola Azarov said Ukraine’s economy grew by 5 percent from the same period a year ago in the first seven months of the year, thanks to a strong performance in July.

“In July, we have (growth) of almost 8 percent,” Azarov said on Aug. 16. The figures, which would represent a strong rebound from a 15 percent gross domestic product plunge during the 2009 recession, could not immediately be verified with the State Statistics Committee, which reports GDP figures quarterly.

“Domestic consumption likely remained the key driver of economic growth, while investments stagnated,” Erste Bank said in a note to investors.

Analysts from Erste added: “Overall, the Ukrainian economy remains at a stable growth pace, although real GDP still remains far from its pre-crisis peak. Full economic recovery to pre-crisis levels is expected by the end of 2012. Currently, we leave our real GDP growth forecast of 4.5 percent for 2011 unchanged.”

Ukraine’s ailing economy has been crawling out of the deep economic plunge it experienced during the global recession. After rebounding by 4.2 percent in year-on-year terms during 2010, Ukrainian officials forecast that GDP would increase by another 5 percent this year.

But much depends on the global economic situation. Recent reports of slowing growth in the United States and Europe have sparked fresh fears about a repeat global slowdown. If it happens, demand for steel and other top Ukrainian exports could plunge yet again, eating into GDP.

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