GDP of Ukraine grew by 2,4%: Real growth or statistical manipulation?

Author : Oleksandr Okhrymenko

Source : 112 Ukraine

The economy of Ukraine is now surviving at the expense of the money of Ukrainians, who are the main investors and the main drivers of economic growth
16:28, 18 May 2017

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According to preliminary data of the State Statistics Committee, for the first quarter of 2017 Ukraine's GDP grew by 2.4% compared to the same period last year. It is worth recalling that for the first quarter of 2016, real GDP growth was only 0.1%, and for the same period in 2015, real GDP fell by 16%. And now we witness growth, and in this connection we should understand, what served the driver to this growth.

For the first quarter of 2017, the industrial production index fell by 0.7% compared to the same period last year. For the first quarter of 2017, agriculture showed a fall of 0.8%. Even such an important indicator as the production of electricity and other energy resources, for the first quarter of 2017 fell by 3%. This clearly shows that the "shadow economy" also fell, but did not grow.

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For the first quarter of 2017, retail trade grew by 3.1%, although wholesale – only by 1% compared to the same period last year. Even more was recorded growth in construction. In the first quarter of 2017, a construction boom was registered in 19.4% compared to the first quarter of 2016. At the same time, housing construction grew by more than 23%. This really became the driver that ensured the growth of Ukraine's GDP. In fact, retail sales and construction have become the main factors for the growth of the Ukrainian economy.

But here the question immediately arises: how the growth of construction is possible if the crediting in Ukraine after the "Gontareva’s reforms" does not work? Now Ukrainians cannot take normal mortgage loans, and therefore the volume of this kind of lending has been declining for the past three years, since the "cleaning of the banking system" began. Therefore, the growth of construction is largely the merit of the Ukrainians themselves, or rather their "stash." In 2016 the devaluation of the hryvnia calmed down, the Ukrainians began to think about what to do with their dollars. Ukrainians do not need dollars, they buy them for currency speculation, to protect their savings from depreciation. But when the US dollar rate does not rise or rather grows insignificant, interest in this currency is lost, and Ukrainians are looking for rational application of their dollars. That is why housing construction in Ukraine grew.

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As for the growth of retail trade, a number of factors influenced here. First, it is the growth of the minimum and nominal wages in Ukraine. In the first quarter of 2017, the average official salary in Ukraine increased by 37% compared to the first quarter of 2016. As a result, Ukrainians began to buy more goods. Secondly, the growth of foreign exchange inflow from migrant workers has done its good work. For the first quarter of 2017, $ 1.8 billion came to Ukraine from migrant workers. Part of this currency, $ 570 million, was exchanged for hryvna and was spent on buying goods in Ukraine. As a result, we have growth in retail sales.

Ukrainians and their money - that is the main driver of Ukraine's GDP. As for business, it is losing ground rather than helping the economy grow. Ukrainian business just cannot work in the conditions of constant "reforms and mess".

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As for foreign trade, this is more a game of figures than a real economy. According to the State Statistics Service of Ukraine for the first quarter of 2017, foreign trade worked with a surplus of $ 106 million, while according to the NBU, Ukraine's foreign trade for the first quarter of 2017 worked minus $ 1.3 billion. Why such a big difference? This is the game of the State Statistics Committee and the National Bank of Ukraine. State Statistics Committee takes into consideration the movement of goods, and the NBU counts on the movement of money. It turns out that the currency simply does not reach Ukraine. So, according to the methodology, this is money that works for the economy of Ukraine, but according to the real picture, at least $ 1.1 billion were funneled to offshores.

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Once again, it is worth recalling to all the "reformers" that the Ukrainian economy is now surviving at the expense of the money of the Ukrainians. And therefore Groisman’s government needs to less fantasize about foreign investors, and more help Ukrainians live normally in Ukraine. Prime Minister should stop raising utility tariffs, reduce the fiscal burden on Ukrainians' incomes and stop provoking the growth of retail prices. Ukrainians deserve positive changes, but this does not mean that Ukrainians should do everything themselves, and Groisman’s government only tells about the "economic miracle in Ukraine."

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