Economy Ministry predicts drop in GDP by 3% in Q1 2021
The Ministry for the Development of Economy, Trade and Agriculture of Ukraine estimates the drop in Ukraine's gross domestic product (GDP) in January-March 2021 at 3%, according to the Economic Activity Review posted on the ministry's website on Monday.
"If before the decision on weekend quarantine in November 2020 and the introduction of the new lockdown in January 2021, the Economy Ministry predicted insignificant GDP growth in the first quarter of 2021, now, given the reduction in the safety margin of most foreign economic activity (especially the service sector) and the depletion of the economy constant fluctuations and changes in working conditions in 2020, the decline in GDP in the first quarter of 2021, which can reach 3%, is obvious," the ministry said in the document.
"Currently, the situation with the incidence rate in Ukraine indicates that the extension of quarantine restrictions in the first quarter of 2021 with severe restrictions in January is inevitable," the ministry said.
At the same time, the ministry expects growth to resume from the second quarter of next year.
At the same time, according to the results of January-November, the Economy Ministry estimates the drop in GDP at 4.7% compared to the same period in 2019, the reduction in the composite production index for this period slowed down to 5.2% compared to 6% in the first 10 months of 2020.
The Economy Ministry said that the weekend quarantine, introduced in November, slowed down the growth rates of the retail and construction sectors compared to October, but did not stop them.
Among the positive factors influencing economic activity, the ministry named the adaptation of some types of economic activity to work under quarantine conditions, as well as the preservation of financial stability – low inflation and predictable restrained exchange rate dynamics. In addition, the population showed high purchasing power, and favorable conditions remained on the world markets for ferrous metals and metal goods. Among the negative factors are low investment activity and the yield of late crops, which was lower than last year's level (corn, sunflower, soybeans, and sugar beets).