NBU names reasons for Ukraine’s GDP fall by 1.3% in Q1 2020

"In the first quarter of 2020, real GDP declined by 1.3% year-on-year. In the first quarter, the Ukrainian economy declined mostly due to the negative impact of quarantine restrictions on services, a sharp fall in investment, further decrease in public sector consumption amid difficult fiscal situation, a slowdown in private consumption and export growth amid weakening external demand," reads the statement.

The actual economic decline was more significant than projected by the National Bank in the April 2020 Inflation Report (0.5%), which was due to the slower growth of consumer and investment demand.

In particular, GDP declined mostly due to the fall in investment. Gross fixed capital formation decreased by 21.4% year-on-year. Such a significant decline in investment was last observed during the crisis of 2014-2015.

In the first quarter of 2020, large and medium-sized enterprises generated a net loss of UAH 4.9 billion for the first time since 2016. The share of unprofitable enterprises rose to 41% compared to 27% in the first quarter of 2019.

Also, household consumer spending continued to rise despite the coronavirus crisis. However, its growth slowed to 8.1% in the first quarter compared to the relevant period last year. It took place due to slower growth of household incomes, deterioration of consumer sentiment and change in consumer behavior due to the introduction of quarantine restrictions.

In terms of activities, the performance of almost all sectors of the economy, except for agriculture sector, deteriorated in the first quarter of 2020.  The main reason was the introduction of quarantine restrictions in Ukraine and in the world.

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