WASHINGTON, D.C. - The "Ukraine Macroeconomic Situation – May 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 May 2019 Macroeconomic Report Situation found in the PDF document  SB_Ukr-Monthly_Ec_Report_May_2019_Final.pdf )

Executive Summary

  1. Volodymyr Zelensky, a TV and movie actor without any political experience won 73% of all votes in the second round of the Presidential elections of April 21th.  His victory was attributed to disillusioning of the Ukrainian people with slow economic grow, increased poverty, widespread corruption, and stalemate in the military conflict with Russian-back separatists in the East.  Rada elections are scheduled for later this year.   
  2. Following four months of declines, in March 2019 industrial production recovered growing by 2.1% yoy, with manufacturing increasing by 5% yoy.  Agricultural production also recovered in March, increasing by 3.5% yoy. Similarly, during the month, construction activities continued to grow at a fast rate of 28.9% yoy (10.8% yoy for building construction and 54.1% yoy for civil engineering).  Ukrainian retail and wholesale trade also continued to perform well with retail trade expanding by 8.9% yoy and wholesale trade growing by 9.5% yoy. Finally, passenger and freight transportation increased by 3.9% yoy and 2.2% yoy, respectively.  
  3. The consolidated fiscal budget had a deficit of about 4.5% of period GDP in March. During 2019-Q1, the cumulative consolidated budget balance from the beginning of the year turned negative at UAH 9.0 billion (1% of period GDP).
  4. Consumer inflation further decelerated in March. The all items index edged down by 0.2 percentage points to 8.6% yoy. Similarly, core inflation dropped 0.2 percentage points to 7.6% yoy.
  5. Although still growing at a reasonable rate, the situation with banking deposits slightly deteriorated in March. Growth of total national currency deposits decelerated to 9.7% yoy on the back of slower expansion of corporate sector deposits. Growth of household deposits remained stable at 15.1% yoy.
  6. Apart from some fluctuation during the first couple of days at the beginning of the month and at the final trading session of the month, the UAH/USD exchange rate was relatively stable during most of April. Overall, the exchange rate appreciated by 3.1% during the month to 26.4 UAH/USD.
  7. In March 2019, the current account of the balance of payments had a deficit of USD 650 million, compared to a deficit of USD 712 million in March 2018. Financial inflows of USD 1,310 million fully covered this deficit, with international reserves increasing to USD 21 billion.

USUBC NOTE:  (entire May 2019 Macroeconomic Report Situation found in the PDF document  SB_Ukr-Monthly_Ec_Report_May_2019_Final.pdf )