Kyiv Post reported that Ukraine economy showed some signs of improvement in July, largely due to a jump in production in the key steel sector, with the ex-Soviet state now hopeful of growing next year after one of Europe’s worst recessions.
Data issued on Monday showed industrial output rose 5%MoM including a record 15% jump in steel on increased demand from China, and preliminary estimates showed the economy shrank 18% in the Q2 against 20% in the first.
Production was still down some 30%YoY for the seven months to July and steel output by more than 40% while other data showed foreign investment fell by 66% in the H1 of the year.
But Prime Minister Ms Yulia Tymoshenko cheered the monthly data saying it showed fundamental and strong signals of growth in various sectors and we can certainly speak of signs of a stable improvement in the economy. She said “In the 2010 budget that we will present in September we will give with confidence a GDP forecast of 3%.”
Ukraine’s economy is expected to shrink 14% to 15%this year. That compares to about 6% in Russia and -2% in Kazakhstan. Only Latvia and Lithuania with forecasts of -17% to 20% for both are expected to be worse off in Europe.
But in the past week France, Germany and Japan have said their economies have crawled out of recession, while steel demand from China has helped stem losses for the heavy industry put at the heart of the economy by Soviet central planning.
Mr Tim Ash head of CEEMA research at RBS said in a research note that “The actual rate of decline was still brutal and indeed quite remarkable for a non conflict economy. The plus though is that this should provide a very low base for 2010, and indeed the government is already speaking of 3%. This could still prove optimistic, and herein much still depends both on the global economy.”
The World Bank estimates Ukraine will post growth next year of 1%. (Kyiv Post)