Poor harvest affects Ukraine's GDP in Q3 – National Bank

The National Bank of Ukraine (NBU) says the grain harvest in 2020, which was below the target and down against the figure reported in 2019, has affected the country's growth domestic product (GDP) in the third quarter (Q3) of 2020, and it may maintain its negative impact on the GDP in Q4.

"By types of activity, all sectors of the economy improved their performance [in Q3], although only some of them increased production compared to last year. Agriculture continued to be a significant contributor to the fall in GDP due to a poorer harvest this year," the regulator's press service said on its website on December 22.

Read alsoUkraine's GDP in Q3 declines by 3.5% y-o-y

At the same time, the further contraction of investment remains a key factor behind the drop in GDP.

Meanwhile, the easing of quarantine restrictions and the recovery in consumer demand amid fewer opportunities for external tourism boosted trade and slowed the decline in the value added of the services sector. Specifically, better performance was demonstrated by hotels and restaurants, arts, sports, entertainment, and real estate transactions, the report said.

In Q4 2020, the further spread of COVID-19 and the tightening of quarantine restrictions will hinder economic recovery. The National Bank forecasts a deterioration in consumer sentiment and businesses' expectations.

"Agriculture will continue to be a significant contributor to the fall in GDP. Meantime, a further easing of fiscal policy and higher government spending on social support, healthcare, and road infrastructure may offset the impediments to economic recovery somewhat," the press service added.

Background

• Ukraine's gross domestic product in the third quarter of 2020 declined by 3.5% year-over-year, according to the State Statistics Service.
• The Ministry for Economic Development, Trade and Agriculture said the grain harvest in 2020 totaled 65.4 million tonnes, which was almost 7 million tonnes down against 2019.