Consolidated budget deficit narrows; Industrial output decline slows; World Bank upgrades forecasts for Ukraine; Banking sector narrows September losses; Merchandise trade deficit at $ 600 million.
Consolidated budget deficit narrows
The Finance Ministry reported a consolidated budget deficit of Hr 16.7 billion for January-August (cash basis); marking an improvement from an Hr 17.8 billion gap in January-July. The consolidated budget ran Hr 1.1 billion surplus in August as revenues jumped by 24 percent month-on-month.
Industrial output decline slows
Ukraine’s industrial output rose by 1.9 percent in September compared to August, narrowing its annualized pace of decline by almost 5 percentage points to 18.4 percent year-on-year. In January-September, industrial production was down 28.4 percent year-on-year. Metallurgical enterprises expectedly cut production by 7 percent in September (versus August) on weaker foreign demand, but their underperformance was fully offset by a 16 percent jump in machinery output. Higher production was recorded in each of the three machine-building sub-industries (mechanical equipment, electrical equipment and transportation machinery), which is encouraging but does not say much about the near-term outlook since the sector as a whole is heavily dependent on new customer orders. Most other industries also managed to increase output last month, pushing overall industrial production up in month-on-month terms. Its annualized improvement was attributable largely to a lower comparison base, as industrial production in Ukraine started to decelerate fast in September last year.
World Bank upgrades forecasts for Ukraine
The World Bank upgraded its 2010 gross domestic product growth forecast for Ukraine to 2.5 percent from 1.0 percent. It also projected next year’s inflation at 10.6 percent (almost unchanged from its previous forecast) and current account surplus at 0.1 percent of GDP (versus a deficit of 0.6 percent of GDP estimated earlier). Expecting the global economic recovery to be slow, the bank forecast Ukraine’s economic growth to accelerate only marginally in 2011, to 3.5 percent. With respect to 2009 projections, the World Bank expects Ukraine’s GDP to decline by 15 percent and inflation to total 13.8 percent.
Banking sector narrows September losses
The Ukrainian banking sector narrowed its losses to Hr 441 million ($57 million) in September compared to an average monthly loss of $334 million suffered in January-August, bringing its total losses over January-September to Hr 20.9 billion ($2.7 billion). Local banks set aside Hr 3.7 billion ($477 million) in loan loss reserves in September, much less than Hr 5.9 billion ($754 million) in August and Hr 6.2 billion ($767 million) on average in the first eight months of the year, which explains the sector’s improved bottom line performance last month.
Merchandise trade deficit at $600 million
Ukraine’s merchandise trade deficit stood at $600 million in August, narrowing marginally compared to July and bringing the January-August trade gap to $3.8 billion, down from $12.5 billion in the same period in 2008. Net of gas imports ($0.7 billion), August’s trade balance was close to zero. Merchandise exports declined by 49 percent to $23.8 billion in the first eight months of the year and imports were down 54 percent to $27.5 billion.
