Major support for economy in Q2 came from household consumption – NBU

This is said in the NBU’s comment on real GDP change in Q2 2021, Ukrinform reports.

At the same time, the actual growth of real GDP in the second quarter of 2021 (5.7% y-o-y) was lower than the National Bank's estimates published in the Inflation Report for July 2021 (7.5% y-o-y). The National Bank explains this by the "later than expected start of the harvest, worse weather conditions, uneven financing of budget expenditures and disruptions in oil supplies."

In April-June 2021, household final consumption expenditure grew by 17.4% year-on-year. The NBU attributes this to high wage growth rates (due to the economic activity revival following the crisis, raising the minimum wage, revising salaries in healthcare and education sectors and additional payments to health workers), as well as a rise in pension payments in March 2021 and pension recalculation for working retirees.

The contribution of the low comparison base was also significant, as strict quarantine restrictions were in place in the second quarter of last year.

In addition, consumption of the general government sector continued to grow. Healthcare expenditures remained a key focus amid the continued fight against the COVID-19 spread. Expenditures for the education sector has also increased.

At the same time, the NBU noted that real GDP growth was restrained by an increase in the negative contribution of net exports. Exports improved slightly, but continued to decline (by 6.2% year-on-year). At the same time, imports grew sharply by 21.5% in the second quarter compared to the second quarter last year.

As reported by Ukrinform, according to the State Statistics Service, in the second quarter of 2021, Ukraine’s GDP decreased by 0.7% (seasonally adjusted) compared to the previous quarter and rose by 5.7% compared to the second quarter of 2020.

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