Ukraine’s gross domestic product (GDP) growth rate slowed to 3.5% in May from 4.2% in April and 4.8% in March as a result of significant damage to electricity generation by Russian attacks, the Institute for Economic Research and Policy Consulting (IEPC) said in its Monthly Economic Monitor.
“Due to the damage to electricity generation, restrictions on business electricity supply have been applied. The IED estimates that the growth rate in the processing industry has slowed to 5% from 11%. At the same time, easier logistics supported the sector’s growth. We are talking, in particular, about machine building and metallurgy,” the IED noted.
According to the institute’s estimates, real gross value added (GVA) growth in the extractive industry increased by 2% due to fairly stable production of gas, iron ore, as well as construction materials.
Real GVA in transportation rose by almost 15%, up from 11% in April, in part due to the unblocking of western borders as well as the statistical base effect.
“In contrast to the weak performance of the “grain corridor” in 2023, the Ukrainian Maritime Corridor allows us to maintain high exports through seaports. At the same time, not only grain, but also iron ore and metallurgy products are brought in,” the IEI stated.
In May, as in the previous three months, consumer inflation was slightly above 3% (3.3%). The IEI believes that this reflected a good harvest last year (and for some products this year) and low export prices for Ukrainian agricultural products compared to last year, lower logistics costs for imports and significant competition for consumer demand.
According to the IEI, this has so far compensated for the increase in a number of business expenses due to rising wages, rising fuel and electricity costs, and the weakening of the hryvnia against the dollar.
It is expected that the balance between the factors restraining price growth and growth of suppliers’ and retailers’ expenses may change in the next months and lead to acceleration of inflation.
At the same time, moderate inflation expectations and relatively limited demand will further restrain price growth, so sharp price increases for most goods are not expected. The exception was the government’s increase in electricity tariff, which led to an increase in the consumer price index by more than 1%.
Monthly inflation accelerated to 0.6% in May due to a 10% rise in fruit prices. At the same time, egg prices continued to fall: they fell in price by 14% and almost halved compared to December last year. Prices for other goods rose by an average of 0.3%.
As reported, after Ukraine’s GDP growth of 5.3% in 2023, the National Bank expects it to slow down to 3% in 2024, while the government expects it to slow down to 4.6%. According to the Ministry of Economy, GDP growth for January-April this year amounted to 4.4%, while the NBU estimated it at 3.7%.
Earlier, the analytical center Experts Club and Maxim Urakin released a video analysis of how the GDP of the world’s countries has changed in recent years, more detailed video analysis is available here – https://youtu.be/w5fF_GYyrIc?si=BsZmIUERHSBJrO_3.
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On Thursday, the European Union will hold elections to the European Parliament (EP), which will last until June 9.
The Netherlands will hold elections on June 6. Ireland – on June 7. Latvia, Malta, and Slovakia – on June 8. The Czech Republic will vote on two days: June 7 and 8, and Italy – June 8 and 9. The rest of the EU states are holding elections on June 9.
More than 370 million European citizens are eligible to vote in 27 EU countries to elect 720 members of the European Parliament.
These elections are held in one round and are intended to determine the national contingents of representatives – members of the European Parliament. Voting is conducted on full lists of candidates nominated by political parties or coalitions. Lists that do not receive 5% of the votes do not get into the EP.
The first estimates of the new composition of the European Parliament will be published on June 9 around 20:15-20:30 Brussels time (21:15-21:30 Kyiv time). The preliminary results are expected between 23:15 and 23:30 (00:15 and 00:30 CET, June 10).
The EP plenary session is scheduled for July 16-19 in Strasbourg. The elected MEPs will gather to structure political factions, elect the leadership of the European Parliament and distribute other organizational posts.
After that, the leaders of the EU countries and the European Parliament will elect the President of the European Commission (EC) and form the EC Executive Board – 27 European Commissioners.
In order to be elected as the head of the EC, a candidate must first receive the support of a qualified majority of the leaders of the 27 EU countries. After that, he or she must receive at least 361 votes from the 720 new members of the European Parliament.
The current head of the European Commission, Ursula von der Leyen, has already announced her desire to run for a second presidency. In early March, the center-right European People’s Party, which has the largest faction in the European Parliament, approved her candidacy for a second term as head of the European Commission during the Congress.
Earlier, Experts Club presented an analytical material on the most important elections in the world in 2024, more detailed video analysis is available here – https://youtu.be/73DB0GbJy4M?si=eGb95W02MgF6KzXU
You can subscribe to the Experts Club YouTube channel here – https://www.youtube.com/@ExpertsClub
According to preliminary estimates of the National Bank of Ukraine (NBU), Ukraine’s international reserves in May decreased by 7.9%, or $3.4 billion, to $39 billion 033.8 million.
“This dynamics is due to the NBU’s foreign exchange interventions to ensure exchange rate stability and the country’s debt payments in foreign currency, which were partially offset by proceeds from the placement of foreign currency domestic government bonds (foreign currency government bonds) and from international partners,” the NBU website explained on Thursday.
Earlier, the Experts Club think tank and Maxim Urakin released a video analysis of the macroeconomy in Ukraine and globally, more detailed video analysis is available here – https://youtu.be/P_-qI9k9Xjc?si=nIQFriaWTYRqdvkU
The National Bank clarified that in April, its net sales of foreign currency amounted to $3.08 billion, which is 30.7% more than in the previous month: The NBU sold $3.09 billion in the foreign exchange market and bought back $11.1 million in reserves.
“This is due to the growth in demand in the foreign exchange market, primarily against the backdrop of increased government spending due to the rhythmic flow of foreign aid in March-April,” the central bank explained the dynamics.
In addition, the current volume of reserves was affected by revenues in favor of the government and payments for servicing and repaying public debt.
In May, $143.1 million was transferred to the foreign currency accounts of the Cabinet of Ministers, while $412.3 million was allocated for the servicing and repayment of the public debt.
It is noted that Ukraine also paid $240.8 million to the International Monetary Fund (IMF).
The central bank added that the volume of reserves was positively affected by the revaluation of financial instruments, adding $216.1 million.
“The current volume of international reserves provides financing for 5.1 months of future imports,” the regulator said.
As reported, Ukraine’s international reserves in April decreased by 3.1%, or $1.4 billion, after reaching a historic high of $43 billion 762.7 million in late March due to record external receipts of more than $9 billion for the month.
On April 25, the NBU raised its reserve forecast for the end of this year to $43.4 billion from $40.4 billion and to $44.3 billion from $42.1 billion at the end of next year.
Earlier, Experts Club and Maksym Urakin released a video analysis on the macroeconomy of Ukraine and the world in 2024, more detailed video analysis is available here – https://youtu.be/P_-qI9k9Xjc?si=nIQFriaWTYRqdvkU
The British Parliament stopped working on Thursday in connection with the general election on July 4, according to the parliament’s website.
“Parliament was dissolved on Thursday, May 30, 2024. All business in the House of Commons and the House of Lords has been completed. There are currently no MPs, and all seats in the House of Commons remain vacant until the general election on July 4, 2024,” the website said.
Sky News notes that the parliament was dissolved immediately after midnight.
The dissolution of parliament before elections is a standard procedure.
Earlier, The Guardian reported that on July 9, the parliament would reconvene with a new composition to elect a speaker and swear in MPs.
The opening ceremony is scheduled for July 17.
Earlier, the Experts Club think tank presented an analytical material on the most important elections in the world in 2024, the possible elections in the UK are in the TOP 5 most important in the world in 2024, more detailed video analysis is available here – https://youtu.be/73DB0GbJy4M?si=eGb95W02MgF6KzXU
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The article summarizes and analyzes the main macroeconomic indicators of Ukraine. In connection with the entry into force of the Law of Ukraine “On Protection of the Interests of Business Entities during Martial Law or a State of War”, the State Statistics Service of Ukraine suspends the publication of statistical information for the period of martial law, as well as for three months after its termination. The exception is the publication of information on the consumer price index, separate information on statistical indicators for 2021 and for the period January-February 2022. The article analyzes open data from the State Statistics Service, the National Bank, and think tanks.
Maksim Urakin, PhD in Economics, founder of the Experts Club think tank, presented an analysis of macroeconomic trends in Ukraine and the world based on official data from the State Statistics Service of Ukraine, the NBU, the UN, the IMF, and the World Bank.
Macroeconomic indicators of Ukraine
Maksim Urakin cited the National Bank of Ukraine’s data on the improvement of the financial situation in 2023 compared to 2022 and the forecast for 2024.
“Optimistic forecasts for international financing, recovery of supply chains, seasonal business revival and growth in domestic demand, as well as slowing inflation, have contributed to positive expectations for economic stabilization in the near future. However, damaged energy infrastructure, rising logistics and labor costs, and a shortage of qualified personnel due to demographic factors remain constraining factors,” Urakin emphasized.
The expert noted that the risks to the economy also include a possible intensification of military operations in the summer and instability of international assistance.
“The baseline scenario for the macroeconomic situation in the country envisages further implementation of prudent monetary and fiscal policies with a focus on maintaining financial stability. Ukraine must consistently fulfill its obligations under cooperation programs with international partners, which will lead to an increase in the public debt to GDP ratio,” the economist said.
Global Economic Outlook
Maksim Urakin also analyzed the global economy, noting a slight improvement in the situation compared to the previous forecast.
“Global economic growth in 2024 may slightly exceed last year’s level, as countries such as India, China and the United States have picked up in recent months. However, the global economic recovery is still constrained by geopolitical conflicts, protectionist policies of major powers and persistent inflation,” the expert explained.
According to the expert, global GDP growth is likely to remain at 2.9% to 3.2% this year and will only slightly accelerate to 3.4% in 2025.
For Ukraine, the main challenges in the coming years will be the need to restore Ukraine after the war and manage the public debt.
Foreign direct investment (FDI) in mainland China’s economy in January-April fell 27.9% year-on-year to 360.2 billion yuan ($49.7 billion), according to the country’s Ministry of Commerce.
That included 58.5 billion yuan in FDI last month, the lowest since November. The figure fell 36% year-over-year and 32% month-over-month.
In January-April, about 12.7% of total investment was in the PRC’s high-tech sector.
As reported, FDI in 2023 fell 8% to 1.13 trillion yuan.
Experts Club Analytical Center and Maxim Urakin released a video analysis of how the GDP of the world’s countries has changed in recent years, more video analysis is available here – https://youtu.be/w5fF_GYyrIc?si=BsZmIUERHSBJrO_3.
Subscribe to Experts Club YouTube channel here – https://www.youtube.com/@ExpertsClub
CHINA, EXPERTS CLUB, GDP, INVESTMENT, MACROECONOMICS, URAKIN
