Highlight: Moody’s rating - WERE THERE REASON TO DOWNGRADE THE RATING?
Politics: Ukraine made several steps to meet the requirements of the EU for signing the Association Agreement.
Real Sector: Manufacturing output in August dropped by 9.0% yoy due to weak domestic and external demand and low competitiveness of Ukrainian goods.
Energy sector: The non-conventional gas exploration in Ukraine is gaining speed. In particular, new signed agreements will help Ukraine to diversify gas supply and increase energy independence.
Agriculture: Approved in September Law “On the production and turnover of organic agricultural products and raw materials” defines legal, economic and organizational basis for production, processing, transportation, storage, certification and labeling of organic produce and raw materials.
External sector: Current account deficit stayed at USD 1.5 bn in August as merchandise trade deficit remained close to two-year highs at USD 1.95 bn and net payments of income reached USD 0.5 bn (the highest level in 2013).
Fiscal policy: The Draft State Budget Law for 2014 was not published, which violates the provisions of the Budget Code.
Social policy: Growth of real disposable income decelerated to 4.7% yoy in the second quarter of 2013 due to slowdown in growth of income from wages and social assistance.
Labour market: Unemployment rate (ILO methodology) declined to 6.9% of economically active population at age 15-70 years old in the second quarter of 2013.
Monetary policy: Headline consumer inflation remained negative at 0.5% yoy in September.
Financial markets: In September demand for foreign currency increased responding to seasonal patterns while supply remained steady.
