Bloomberg News

Ukrainian Recession Confirmed as Fourth-Quarter GDP Shrinks 0.9%

January 30, 2013

Ukraine’s economy slipped into its first recession since 2009, contracting for a second quarter as exports including steel slid because of weak demand.

Seasonally adjusted gross domestic product fell a preliminary 0.9 percent from the previous three months in the fourth quarter after declining 1.2 percent in the July-September period, the State Statistics Committee, based in the capital, Kiev, said today on its website. GDP dropped 2.7 percent from a year earlier, missing the 1.8 percent median estimate of nine economists in a Bloomberg survey.

Representatives from the International Monetary Fund arrived in Ukraine yesterday for talks over a third bailout in four years as the former Soviet republic grapples with a widening current-account gap, foreign reserves that have dipped below three months of imports and $10 billion of debt payments scheduled for this year. The government wants a loan of about $15.4 billion and the same terms as its last aid package.

The hryvnia has lost 0.9 percent against the dollar this year, closing yesterday at 8.125. The cost to insure government debt against non-payment for five years using credit-default swaps has fallen to 575 basis points from 627 points on Dec. 31. A basis point is 0.01 percentage point.

Industrial output fell for the first time since 2009 last year, dropping 1.8 percent after a 7.6 percent jump in 2011 as metals output plunged 5.2 percent, official data show.

Reserves declined to $24.5 billion in December from $38.2 billion in August 2011 as last year’s current-account gap widened to a record $14.4 billion. Imports averaged $8.6 billion a month in 2012, according to the central bank.

Ukraine’s economy will expand by 3 percent to 4 percent this year, Prime Minister Mykola Azarov predicts. That’s more optimistic than Goldman Sachs Group Inc. (GS:US), which estimated Jan. 24 that GDP will contract 1.8 percent.

To contact the reporter on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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