The growth of Ukraine’s gross domestic product (GDP) in 2018 reached a record level since 2011 – growing by 3.3 percent compared to 2.5 percent in 2017, the State Statistics Service of Ukraine reported on March 21.
However, it still fell short of the 3.5 percent forecast figure given late last year by the International Monetary Fund (IMF).
Nominal GDP reached $131 billion in 2018, which is $19 billion more than for the previous year.
The acceleration in economic growth was caused by a 7.8 percent jump in agricultural output following a record high grain harvest, while consumption (8.9 percent) and investment (14.3 percent) were the key underlying drivers, according to Olena Bilan, chief economist at Ukraine’s leading private equity firm Dragon Capital.
Trade and construction together were responsible for near 11 percent of the growth, while manufacturing saw a paltry 0.6 percent growth, which acted as restraining factor.
GDP per capita was also up reaching $3,098. However, this is still modest compared to other European countries, like Poland, where the figure is fives time higher, at $15,444, or Hungary, where it is $14,237.
A sharp slowdown in the growth of imports, to 3.2 percent from 13 percent in 2017 also helped GDP growth, according to Dragon Capital.
However, 2019 might be less successful year for the economy, experts forecast.
According to Evgeniya Akhtyrko, an expert in macroeconomics at Concorde Capital, Ukraine’s economy might slow to 2.9 percent growth this year amid less impressive agricultural performance.
Bilan’s prognosis is even worse – due to the partial loss of gas transit in 2020, real GDP growth is projected at 2.5 percent in 2019 and 2.8 percent in 2020. The main growth drivers will remain the same this year and the next one – consumption and investment. However, investment growth will hardly soar – most likely it will be moderate because of election uncertainty.
The IMF also has worsened Ukraine’s GDP growth forecast to 2.7 percent in 2019, down from the previous forecast of 3.3 percent, the Kyiv Post reported earlier.
The National Bank of Ukraine also doesn’t expect that the country’s GDP will increase more than 2.5 percent this year, and in 2020 – 2.9 percent.
At the same time, Ukrainian Prime Minister Volodymyr Groysman says he expects more for the country – at least three percent growth in 2019.
“This year we’re working to ensure that economy will steadily increase by more than 3 percent,” Groysman is quoted as saying in a post on the government’s website. “We will continue to make a major overhaul of the country, to invest resources in roads, infrastructure, and to build social infrastructure objects,” Groysman said.
