WASHINGTON, D.C. - The "Ukraine Macroeconomic Situation – July 2019" analytical report with several charts and graphs IS ATTACHED to this communication and can be found at the link below.  The monthly Macroeconomic Situation report is prepared by SigmaBleyzer, www.SigmaBleyzer.com, and The Bleyzer Foundation (TBF), www.BleyzerFoundation.org, Kyiv, Ukraine, who are long-time members of the U.S.-Ukraine Business Council (USUBC), http://www.USUBC.org. 

USUBC NOTE:  (entire July 2019 Macroeconomic Report Situation found in the PDF document SB_Ukr-Monthly_Ec_Report_July_2019_Final.pdf)

Executive Summary

  1. The central topic in the Ukrainian current political landscape is the forthcoming parliamentary election scheduled for July 21st.  The average of three recent polls show that the President’s political party “Servant of the People” would be able to win around 43% of the votes among decided voters, based on its anti-corruption, pro-European stance.  As only five to six political parties may be able to pass over the threshold of 5% of the votes, it is likely that the Presidential party may secure more than 50% of the seats in Parliament. This would permit the Rada to form rapidly a new Cabinet of Ministers and start the President’s reform agenda.
  2. A revision of GDP growth in the first quarter of 2019 shows that the economy performed better than expected, with a GDP growth of 2.5%, compared to a previous estimate of 2.2% for the first quarter.  For the year as a whole, GDP in 2019 is expected to growth at a rate of about 3.0% (compared to an earlier forecast of 2.8%), supported by lower energy prices, higher metallurgy prices, and higher agricultural output and exports.
  3. The consolidated budget was executed with a surplus for the second month in a row in May.  As a result, the total cumulative budget surplus from January to May reached UAH 33.9 billion (2.2% of period GDP).
  4. Consumer inflation significantly accelerated in May 2019 to 9.6% yoy, due to higher prices for foodstuffs and transportation. At the same time, core inflation remained unchanged at 7.4% yoy.
  5. In the banking sector, national currency deposits expanded at a rate of 5.6% yoy. Bank lending activities were  sluggish in May. National currency loans increased by 1.0% yoy, with household loans expanding by 27.5% yoy, while business loans declined by 5.9% yoy.
  6. The UAH/USD exchange rate was on the appreciatory trend in June reaching 26.1 UAH/USD by the end of the month. The major appreciation was the result of the sovereign bonds auctions held by the Ministry of Finance.
  7. In May 2019, the current account of the balance of payments had a surplus of USD 249 million, compared to a deficit of USD 79 million in May 2018. This improvement in the current account was supported by surpluses in the primary income account and by an improvement in the balance of good and services. However, this current account surplus was insufficient to cover net financial outflows of USD 1,004 million in May.  As a result, international reserves declined to USD 19.4 billion by the beginning of June.  Nevertheless, reserves recovered to USD 20.6 billion by the beginning of July.

USUBC NOTE:  (entire July 2019 Macroeconomic Report Situation found in the PDF document SB_Ukr-Monthly_Ec_Report_July_2019_Final.pdf)