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Jul 30, 2012

Ukraine’s Economic Growth Quickened to 3% in Second Quarter


Ukraine’s economic growth quickened in the second quarter, when the former Soviet republic made final preparations for the Euro 2012 soccer championship.

The economy grew a preliminary 3 percent in the second three-month period from a year earlier after expanding 2 percent in the first three months, the Kiev-based statistics committee said today on its website, without providing details. On a seasonally adjusted basis, gross domestic product advanced 1.9 percent from the first quarter, the committee said.

“This is possibly the result of construction and other work in preparation to the Euro 2012 soccer championship,” said Alexander Valchyshen, head of research at Investment Capital Ukraine. “Another factor is domestic consumption.”

Ukraine had a one-time benefit from its partnership with Poland in hosting the premier European soccer tournament in June after the two nations poured $35 billion into roads, airports, hotels and rail lines, economists said. That advantage will probably wane as the euro-area debt crisis trims demand for exports such as metals, which generate more than 50 percent of GDP.

The government predicts the economy will expand 3.9 percent in 2012 after growing 5.2 percent last year. The World Bank on July 19 cut its forecast for Ukraine’s GDP by 0.5 percentage point to 2 percent this year.

Domestic Consumption “Through the end of the year, the economy will be helped by domestic consumption, which remains strong because of loose fiscal policy and exceptionally low inflation,” said Olena Bilan, the chief economist at Kiev-based investment bank Dragon Capital. “This factor will weaken next year because fiscal policy will be more conservative after elections.”

Ukraine’s government bonds due to 2013 rose, pushing yields down to 8.283 percent as of 5:10 p.m. Kiev time, the lowest level since March 14, data compiled by Bloomberg show.

Industrial production rose 0.4 percent in the first six months of the year, compared with 9.3 percent in the same period a year ago, according to the state statistics data.

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