NBU expects Ukraine's GDP to fall by 11.3% in Q2, 2020
The fall in real gross domestic product of Ukraine (GDP) in the second quarter of this year will accelerate to 11.3% from 0.5% in the first quarter, the National Bank of Ukraine (NBU) predicts in an updated inflation report.
"The Ukrainian economy will experience the greatest shock in the second quarter of 2020. The unemployment rate will rise to about 12% in seasonally adjusted terms, and wage growth will stop," the document says.
According to the bank, in the third quarter of this year, the economic decline will slow down to 5.3%, and in the fourth quarter to 2.3%, as a result of which, over the whole year, GDP will decrease by 5%.
"The gradual lifting of quarantine will lead to the restoration of the Ukrainian economy in the second half of 2020. This will also be facilitated by soft fiscal and monetary policies. The increase in government budgetary spending to overcome the crisis and the National Bank's measures to maintain the banking system will reduce the negative impact of the pandemic on the economy," the regulator said.
The NBU expects a slight contraction in the economy in the first quarter of next year, by 0.3%. However, in the second quarter, due to the low assessment base, according to its forecast, GDP will jump immediately by 11.3%. The subsequent growth of the economy by 4.6% and 2.1% in the third and fourth quarters, respectively, will lead to a general growth rate of 4.3% for 2021.
The central bank indicates that both the decline and recovery will be uneven in the types of economic activity. In particular, from the introduction of quarantine restrictions, the services sector, retail, and transport will lose more. After quarantine is over, these sectors will partially recover, but will still suffer from a slow recovery in population incomes. Tourism and related aviation services, according to the NBU, will fully resume only next year.