Ukraine’s gross domestic product grew by 0.8% in the fourth quarter of 2020 compared to the third quarter, the Economy Ministry reported on Feb. 15.
According to the ministry, the increase in the minimum wage to Hr 5,000 ($180) stimulated consumer demand in Ukraine and drove economic growth in October–December.
Many businesses have found ways to cope with restrictions created by the pandemic. The ongoing recovery across the world’s markets is another factor that helped to close out 2020 with a higher than expected gain in the final quarter of 2020, the ministry stated.
“Preliminary statistical reporting indicators for 2020 show that Ukraine has withstood the test of the impact of the COVID-19 pandemic,” wrote Ihor Petrashko, economy minister, in the press release.
Overall, if compared to 2019, GDP still showed a decrease: it dropped by 0.7% in October–December compared to the same period in 2019. But Ukraine did better than expected. Despite the government’s forecast of a GDP contraction of 4.8% and other estimates as pessimistic as 6.5%, GDP only fell by 4.2%, despite the lockdowns and strengthened quarantine restrictions.
Dragon Capital financial expert Sergey Fursa explained that Ukraine’s flexible quarantine restrictions helped the economy recover quickly and called last year “a good result” in the context of the pandemic.
Even though the expert is not sure if Ukrainian people will notice the stronger-than-expected economic recovery, he predicts that the increased minimum wage will continue to boost consumer spending in the country.
“Ukrainians have got used to saying that they don’t feel it (economic recovery),” Fursa told the Kyiv Post.
The coronavirus has crippled the world’s economy, distorting international trade flows. In 2020, global GDP suffered its sharpest drop since the end of World War II and many countries continue to struggle with rising unemployment rates.
Torn between saving lives and reviving the economy, some governments chose to lift restrictions to ease their economic effects while others continue to use stricter measures to curb the spread of the virus.
But while some European countries like France and Italy lost 8% from their GDP, Ukraine’s main industries — agriculture and metallurgy — have not been hit as hard as other sectors like tourism and aviation, preventing the worst from happening.
Analysts anticipate that higher activity in the agriculture and real estate industries in the spring will help the economy rebound faster. The country’s GDP is projected to decline by 0.5% in January-March compared to the same period last year, but then, it will see a 10.2% increase in April-June, according to a poll by British news agency Reuters.
