Quarantine, fall in demand main reasons for decline in economy in 2020 - NBU

In 2020, real GDP decreased by 4% in annual terms after a 3.2% growth in 2019. The main factors that caused the fall in GDP in 2020 were quarantine restrictions introduced in Ukraine and around the world to prevent the spread of COVID-19, as well as the decline in domestic demand, especially investment, due to pandemic-related uncertainty.

The actual GDP indicator practically corresponded to the NBU estimate published in the Inflation Report for January 2021 (4.4%). The smaller economic decline in the fourth quarter than expected by the regulator was due to the improvement in some sectors (construction, industry, trade) in December 2020.

According to the NBU, the Ukrainian economy has proved to be more resilient to the current crisis than the previous ones. The corona crisis was not accompanied by rapid devaluation and inflation, and the fall in real GDP was not as significant as expected at the beginning of the crisis.

The deepest economic decline was recorded in the second quarter (by 11.2% in annual terms) due to strict quarantine restrictions. At the same time, in the second half of 2020, the economy began to recover rapidly and almost reached the pre-crisis levels in the fourth quarter of 2020.

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