Ukraine: GDP Growth is High, Services Keep the Lead
OREANDA-NEWS. According to the State Statistics Committee of Ukraine, the real GDP growth was estimated at 7.5% y/y for January-August 2007 (7.7% for January-July 2007). The highest growth rates were in manufacturing (12.9% in 8M2007 vs.13.1% in 7M2007), construction (10.2% in 8M2007 vs. 11.9% in 7M2007) and trade and related services (16.7% in 8M2007 vs.16.1% in 7M2007).
According to Millennium Capital analytic center, a substantial reduction in growth rate was observed in agriculture (from 5.2% in 7M2007 to 2.9% in 8M2007). Apart from trade, acceleration was seen in utilities (from -0.1% in 7M2007 to 0.3% in 8M2007), transport and communication (from 5% to 5.3%). In general, the growth rate of GDP was quite high in 8M2007 and exceeded that of 8M2006 by 1.8 percentage points (5.7% y/y in January-August 2006). The GDP growth turned out to be what was forecasted in Sept. 2007 and so a forecast for the real GDP growth in 2007 is 6.9%. The Cabinet of Ministers expects GDP growth rate to be at 6.5% in 2007, other official sources claim it to lie between 7% and 8%.
The real GDP continues fairly intense growth. In spite of deceleration of growth, it is still substantially higher than in the previous year. The main decelerating factor in GDP growth was the slow down in agriculture because of bad weather. Growth in trade and related services has been overdoing the previous growth rate in each month, being impressive. It is explained by the demand factors - increased purchasing power of the population and new promises of authorities to increase the population income. On the one hand, it stimulates the consumption in the current period, and, on the other hand, it also increases inflationary expectations for the ongoing year, so much depends on the NBU's monetary policy.
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