Ukraine Economy one of the hardest hit
Ukraine Economy Shrank 20.3%, Fastest Pace on Record
By Daryna Krasnolutska
June 30 (Bloomberg) — Ukraine’s economy contracted at the fastest pace on record in the first quarter as the global financial crisis took its toll on the eastern European nation, cutting its production, consumption and investments.
Gross domestic product plummeted 20.3 percent, compared with growth of 6.3 percent in the same period a year ago, the Kiev-based state statistics committee said today in a statement on its Web site. The median forecast of 11 economists in a Bloomberg survey was for a 22 percent decline.
The global recession is compounding problems in east European economies, which are being battered by a lack of credit, weakening currencies and plunging demand for their products on world markets. In November, Ukraine was forced to turn to the International Monetary Fund along with other emerging-market countries including Hungary and Latvia for funds to support its financial system and avoid default.
“It’s a large headline drop in gross domestic product, but in line with market expectations,” said Jathan Tucker, head of trading at Kiev brokerage Galt & Taggart Holdings Inc. “The full year number will be impacted more by what goes on with non- performing loans and the banking sector later this year.”
Ukraine’s bad loans rate jumped to 4.89 percent of all loans by June, compared with 2.27 percent as of Jan. 1 as households and companies struggle to repay debts, the central bank said June 24. Non-performing loans may reach more than 20 percent of the total by the end of 2009, Moody’s Investors Service said June 22.
Construction Slump
The first-quarter contraction was led by industrial production, construction and trade, data showed. Output has declined more than 30 percent each month this year, while retail sales slumped 15.3 percent in the first five months of the year, compared with growth of 30.2 percent last year.
Ukraine’s Presidential office of Viktor Yushchenko, which is in a struggle with Prime Minister Yulia Timoshenko’s government, forecast the economy will contract by 10 percent this year, the steepest decline since 1996. The government still officially sees growth of 0.4 percent.
Ukraine’s economy, which has been expanding at an average annual pace of almost 7 percent since 2000, shrank 8 percent in the fourth quarter, the first contraction since 1999.
(from www.bloomberg.com)
