As economic growth falls across Europe, Ukraine may be embarking on an upswing.
Data this week showed expansion in Ukraine surged last quarter, even as U.S.-China trade tensions and a wider global slowdown weighed on most of the continent, Bloomberg reports.
The pace – 4.6% – was unexpectedly quick. The World Bank had warned that if growth didn’t top the rate of recent years it would take half a century to bring income up to the levels of neighboring Poland, which has thrived since joining the European Union.
President Volodymyr Zelensky, who won control of parliament last month, has set his sights on expansion of 5% or more in the coming years. A reform plan is fueling optimism among investors and has made the hryvnia this year's best-performing currency.
"The initial signs are encouraging," said Viktor Szabo, investment director at Aberdeen Asset Management PLC in London, who helps oversee $14 billion in emerging-market debt.
He expects a "bold" program with the International Monetary Fund to be agreed on once a new government is in place next month, though says an overhaul of the country’s murky court system is vital to the new president's success.
Ukraine’s economy has had a rocky ride since 2014, when protesters ousted Kremlin-backed Viktor Yanukovych and Russia seized Crimea before fomenting a war on the two nations’ border.
With the pro-EU administration that followed not tough enough on corruption, the rebound from recession was meager. That paved the way for Zelensky, a former TV comic and political novice, to take power.
His plans highlight where the previous government fell short: judicial reform, privatization and loosening rules on owning farmland. Meanwhile, inflation has eased, allowing the central bank to trim eastern Europe's highest benchmark interest rate.
Local businesses see now rosier prospects for the economy, according to a regular survey by the central bank.
The dip in global economic expansion will curb demand for Ukraine's metals and agricultural exports. And it remains to be seen whether Zelensky can stem the tide of emigration to the richer EU.