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POLL-Analysts see sharp fall in Ukraine Jan-Feb GDP

Published 03/05/2009, 03:00 AM

By Natalya Zinets

KIEV, March 5 (Reuters) - Analysts polled by Reuters see Ukraine's economy in January-February shrinking by almost 17 percent compared to growth in the two months of 5.8 percent last year and have slashed their year-end forecast to -8.4 percent from -5.9 percent.

The State Statistics Committee said last month it would stop publishing monthly gross domestic product (GDP) data and announce only quarterly results three months after the event.

The 13 analysts polled by Reuters said macroeconomic data on February should show more accurately the state of the economy, hit by falling exports and currency depreciation, than January's result when Russia cut off gas for three weeks over a pricing dispute.

The economy shrank by up to 20 percent according to analysts and central bank officials in January year-on-year, as industrial output dropped over 34 percent in the same period.

"The significantly negative result of industrial output and the economy in January was in part linked to disrupted gas supply and did not fully show the economy's reaction to the crisis," ING analyst Alexander Pecherytsyn said.

"February's numbers can give a more realistic picture of the economy. We do not expect, however, the economy in February to have gotten much better because of continued reduction in domestic demand and ... although external demand for metals has stabilised, there is no significant growth."

Analysts saw inflation slowing month-on-month in February to 1.9 percent from 2.7 percent in January. Year-on-year the predicted prices rose 21.6 percent against 21.9 percent in the same month last year.

"There is an expectation of a certain slowing of inflation as wages fall and due to the relative stability of the exchange rate in the second half of January and most of February," said Vitaly Kravchuk, of the Institute for Economic Research.

"A high comparative base also will allow for slowing inflation."

The hryvnia currency, they said, will remain under pressure but at 8.7 to the dollar by the end of March, its level would still be stronger than a record low of 9.5-10/$ hit in December when it lost half of its value in four months.

"Capital flight in January amounted to $2.3 billion and in 2009 it could amount to more than $11 billion," said Erik Naiman of Ukrsotsbank.

"Capital flight at the moment is what is negatively impacting on the hryvnia while the trade balance is equalised. However, as soon as capital flight ceases, the hryvnia has a chance to strengthen."

Below are the results of the survey of analysts at Alfa Bank, ING, Erste Bank, Invest Capital Ukraine, the Institute for Economic Research and Political Consulting, Interbusiness Consulting, Concorde Capital, the International Centre for Policy Studies, Troika Dialogue, Ukrsotsbank, UkrSibbank, CASE and the Razumkov centre.

median lowest highest govt fcast 2008 CPI Feb (m/m) 1.9 1.0 3.0 n/a 2.7 CPI Feb (y/y) 21.6 20.8 22.9 n/a 21.9 CPI 2009 18.2 (16.5) 15.0 28.0 9.5 22.3 GDP Jan-Feb (y/y) -16.8 -12.0 -23.0 n/a +5.8 GDP 2009 -8.4 (-5.9) -4.5 -13.0 +0.4 +2.1 Output Jan-Feb -28.2 -19.0 -35.0 n/a +8.8 Output 2009 -15.0 (-11.9) -8.0 -30.0 n/a -3.1 Hryvnia/$ end-March 8.7 7.7 10.0 n/a 4.99 Hryvnia/$ end-Dec 9.60 (8.89) 8.2 11.0 n/a 7.65 Trade gap 2009 ($bln) -4.0 (-6.1) +0.5 -11.7 -7.08 -13.8 C/A gap 2009 ($bln) -2.5 (-4.3) +1.0 -6.5 n/a -11.9 * Results in brackets are forecasts from a month earlier. (Writing by Sabina Zawadzki; Editing by Ron Askew)

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