Newsletter Issue 136 | February 2020

Ukraine’s economy in good shape

Ukraine emerges from 2019 in a stable economic shape. GDP growth was at 3.5%, driven by strong domestic demand, despite two elections being held in 2019. Due to strong inflow of foreign capital to the domestic bond market, the Hryvnia appreciated by 16% against the US dollar. Inflation was at 4.1% and thus for the first time within the National Bank’s target range, allowing a gradual reduction of the policy rate. Both the current account and budget deficits are under control at ca. 3% and 2% of GDP, respectively.

For Ukraine, these are good values of the key macroeconomic indicators, especially in the context of recent years. The task for economic policy will now be to maintain this stability and to confirm the new trust of investors in the Ukrainian economy. Maintaining a good relationship with the IMF plays a key role in this regard. Going forward, it is necessary to sustainably increase the stable but low growth by carrying through the announced structural reforms.

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