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  • Monthly Economic Monitor Ukraine No.12 (158)

    11.12.2013

    Highlight: Ukraine-EU - UKRAINE-EU: STRATEGIC PAUSE OR CHANGING THE COURSE 

    Politics: Ukraine refused to sign the Association Agreement with the European Union, and, thus, deferred establishment of a Deep and Comprehensive Free Trade Area with the EU to an indefinite future. The refusal triggered the largest protests since the “Orange revolution” in 2004.

    Real Sector: Ukrstat revised upwards real GDP in the third quarter but it still declined by 1.3% yoy, which is the fifth quarter in a row of declining real GDP.

    Energy sector: If gas consumption volumes remain unchanged Ukraine will not have enough gas to survive through the winter and will have to reach an agreement with Gazprom or find additional sources of gas supply.

    Transport: Ukraine ratified an Agreement on Common Airspace with the EU.

    Agriculture: Grain harvest reached record levels in 2013.

    External sector: Current account deficit shrank to USD 1.9 bn in October from USD 2.2 bn in September. Revised deficit for September was the largest since 2009.

    Fiscal policy: In 2013 capital expenditures are likely to be significantly lower than annual target. Moreover, the Government will not be able to finance fully and timely current expenditures.

    Social policy: The Pension Fund was allowed by the Government to attract bank loans for liquidity management purposes, which may be dangerous.

    Labour market: In October wage growth decelerated to 5.6% yoy due to worsening of financial situation of companies.

    Monetary policy: Monetary conditions tightened in October as the NBU withdrew liquidity through interventions on foreign exchange market and increased reserve requirements.

    Financial markets: International reserves dropped to USD 18.8 bn by the end of October.

    Issue:  No.12 (158) December 2013
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