Structure of Ukraine’s GDP in 2021 (production method, graphically)
SSC of Ukraine , graphics of the Club of Experts
Real GDP percentage changes over previous period in 2018-2022
SSC of Ukraine , graphics of the Club of Experts
The international rating agency Fitch Ratings has downgraded its global economic growth forecast for 2022 to 2.4% from 2.9% expected in June.
“The European gas crisis, high inflation and a sharp acceleration in the pace of tightening of monetary policy in the world entail serious consequences for the economic outlook,” the updated Global Economic Outlook (GEO) said.
The global GDP growth forecast for 2023 has been lowered to 1.7% from 2.7%.
The eurozone and UK economies will fall into recession as early as this year, while the US will face a mild recession in mid-2023, Fitch predicts.
Eurozone GDP, according to the agency’s new forecast, will decrease by 0.1% in 2023 due to the consequences of the gas crisis (in June, an increase of 2.1% was expected).
The new forecast takes into account the complete or almost complete cessation of pipeline gas supplies from Russia to Europe. Fitch experts note that, despite the EU’s attempts to find alternative sources of supply, the supply of gas in the region will be significantly reduced in the near term, which will affect the industrial sector.
The growth forecast for the US economy for the current year has been worsened to 1.7% from 2.9%, for 2023 – to 0.5% from 1.5%.
“The recovery of the Chinese economy is constrained by quarantine restrictions and a downturn in the real estate market, and therefore we expect China’s GDP to increase by 2.8% in 2022 and grow by 4.5% next year,” Fitch said in a review. In July, the growth of the Chinese economy was predicted by 3.7% and 5.3%, respectively.
High and persistent inflation and rising inflationary expectations are forcing the Federal Reserve (Fed), the Bank of England and the European Central Bank (ECB) to become more hawkish in recent months, Fitch said. The base interest rates of the world’s leading central banks are rising at a much faster rate than one might expect.
According to Fitch’s forecast, the Fed will raise the rate to 4% by the end of this year and keep it at this level throughout 2023, while the ECB will bring the lending rate to 2% by December of this year. The base rate of the Bank of England will reach 3.25% by February 2023, agency experts believe.
A decline in real gross domestic product (GDP) of Ukraine amounted to approximately 35% in August 2022 compared to August 2021, this estimate was given by the Ministry of Economy on Thursday.
“As you can see, the GDP decline rate is slowing down. This is confirmed by the trends that were observed in the second quarter and August of this year,” the ministry points out, commenting on the data released by the State Statistics Service on a GDP decline in the second quarter of 2022 by 37.2% compared to the second quarter of 2021, which is less than the previous estimates of the Ministry of Economy (40.6%).
“Over 2022, we expect a slowdown in a GDP fall to 33.2%. When forming the state budget for 2023, we will proceed from a conservative scenario for the development of events, which will allow the state to reduce budget risks and fully fulfill all its obligations to citizens,” the message quotes Deputy Prime Minister and Minister of Economy Yulia Svyrydenko.
The ministry indicates that August macro indicators were positively influenced by the partial unblocking of grain exports from the ports of Great Odesa to the EU countries, as well as the acceleration of a pace and volume of grain harvesting in the territory controlled by Ukraine. As of the end of August, 25.3 million tonnes had been harvested.
“In the future, a pace of recovery will depend on a situation at the front, a scale and speed of obtaining donor assistance, an availability of ports for export, a return of Ukrainians from abroad and a growth of labor productivity. Today there are grounds for restrained optimism,” Svyrydenko said.
The Ministry of Economy pointed to an observed improvement in business expectations about the prospects for their economic activity: the business activity expectations index in August amounted to 44.1 versus 43.6 in July.
Establishing import logistics chains and diversifying suppliers stabilized fuel prices, which reduced inflationary pressure on the economy amid falling external prices, especially for energy and food, the release notes.
In addition, in August Ukraine received a significant amount of international assistance – $4.6 billion, including $3 billion in grant funds from the United States through the World Bank. “In the foreseeable future, this makes it possible to ensure macroeconomic stability, cover military spending and reduce the budget deficit,” the Ministry of Economy believes.
Structure of Ukraine’s GDP in 2021 (production method, graphically)
SSC of Ukraine
The volume of the German economy in the second quarter did not change compared to the previous three months, according to preliminary data from the German Federal Statistical Agency (Destatis).
In annual terms, GDP growth, adjusted for the number of working days, was 1.4%.
Analysts on average expected the first indicator to rise by 0.1% and the second by 1.7%, according to Trading Economics.
In the first quarter, GDP grew by 0.2% qoq and increased by 3.8% yoy.
The volume of the German economy is still 0.2% lower than in the fourth quarter of 2019 – that is, in the last quarter before the onset of the coronavirus pandemic, Destatis said.
Destatis will publish final data on the dynamics of the country’s economy in the second quarter on August 25.
At the same time, the statement of the statistical office notes that due to the ongoing COVID-19 crisis and the Russian invasion of Ukraine, the data is subject to more uncertainty than usual. This indicates the possibility of a stronger revision of the figures compared to those originally announced.
