The FINANCIAL -- Expasion of the Ukrainian economy remained strong in October despite
weaker industrial sector performance. According to NBU estimates, real
GDP growth exceeded 5% yoy for January-October 2011.
The growth was led by agriculture, construction and domestic trade. In particular, as of mid-November 2011, Ukraine had harvested about 54 million tons of grains. For the year 2011, the crop harvest may exceed 55 million tons, a historical record. In addition, selected vegetables and oilseeds also reported record harvests.
As a result, output growth in the agricultural sector sped up to 16.6% yoy over the period, up from 13.7% yoy for January-September. The plentiful harvest and strong consumption underpinned a 5.5% yoy increase in the production of food and beverages in October. At the same time, declining cattle breeding kept weighing on the industry’s growth as production of dairy and meat products was down by 12.6% yoy and 1% yoy, respectively, in October.
Construction advanced by 11.7% yoy amid realization of large infrastructure projects related to Ukraine co-hosting the Euro 2012 football tournament. Retail sales grew by 14.9% yoy over the period amid strong real wage growth.
At the same time, industrial sector growth eased from 6.4% yoy in September to 4.7% yoy in October due to weaker performance of export-driven industries. Concerns over cooling global economic growth adversely affected world commodity prices and external demand. As a result, metallurgy, chemicals and machine building slowed to 5.3% yoy, 2.8% yoy and 13.1% yoy, respectively, in October.
The good harvest and buoyant imports supported wholesale trade performance. At the same time, slowing exports and industrial production restrained growth in both wholesale trade and transportation sectors in October. As the external environment will remain challenging for the rest of the year and in 2012, real GDP growth is projected to stay at around 5% yoy for the year2011 and to moderate to 3.5% yoy in 2012.
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