Lockdown measures to battle the coronavirus pandemic will cause Ukraine’s economy to shrink by 1% in the first quarter of 2020 and by 10.9% in the second quarter, a Reuters monthly poll of analysts said.
The government has forecast that the country’s gross domestic product will shrink by about 5% overall this year and the State Statistics Service will publish GDP data for the first quarter in mid-May, Reuters reports. If the Reuters poll forecast is confirmed, this will mark the first quarterly decline in economic growth for Ukraine since 2015. Last year, the first two quarters had growth of 2.9% and 4.7% respectively. In the wake of Russia’s annexation of Crimea and ongoing hostilities with Russia-controlled forces in the industrial Donbas, GDP fell by 16% in the first quarter and by 14% in the second quarter of 2015. With recession looming again, the government is trying to secure an $8-billion package from the International Monetary Fund, conditional on reforms.
Artem Shcherbyna from investment company Capital Times said: “Due to the implementation of quarantine measures throughout Ukraine in April-May, we are recording a partial or full halt to the activity of most sectors of the national economy.”
The government has extended to May 22 a nationwide lockdown initially imposed in mid-March, banning or limiting many business operations except critically important services.
“A deep drop is seen in the passenger transport sector (due to the quarantine) and in industries (due to a fall in external demand, primarily due to the quarantine in the EU),” wrote Hanna Cherednychenko from the think tank International Centre for Policy Studies.
She also said wholesale and retail trades suffered due to low demand from households, with people staying at home and curbing their spending as incomes were hit.
The poll, conducted with analysts from 11 Ukrainian banks and investment companies, also pointed to the country’s economy starting to recover in the second half of the year. But the analysts said it was difficult to predict when exactly the recovery would start or how strong it would be until a date for lifting the lockdown fully was fixed. The government has promised to lift some restrictions from May 11, depending on the epidemiological situation. This could include reopening parks as well as some shops, such as those specializing in household goods. (UNIAN/Business World Magazine)
