GDP will enter a positive trend in the second quarter of 2021, and by the end of the year is projected to grow at 4.1%.
According to the State Statistics Service, in the first quarter of 2021, seasonally adjusted GDP decreased by 1.2% compared to the previous quarter. The fall in GDP in the first quarter of 2021 is primarily due to the introduction of winter and regional spring lockdowns, as well as low economic activity, which is traditionally observed at the beginning of the year.
The components of demand such as investment decreased the most – due to uncertainty (minus 4.9%) and exports (minus 4.7%) – due to the slow recovery of global demand in the context of a significant increase in commodity market prices. At the same time, there was an increase in final consumer expenditures by 1.4% due to an increase in the minimum wage, in particular, from January 1, 2021, there was an increase in the minimum wage to UAH 6,000 and, accordingly, the average monthly wage (according to Gosstat in Q1). In 2021, the real growth of wages compared to the first quarter of 2020 was 8.5%), as well as budget expenditures to meet medical needs and support the population and business to stimulate demand.
The dynamics of GDP for the first quarter of 2021 corresponds to the previously forecast trends. However, in the second quarter of 2021, GDP is expected to enter a positive trend.
Positive trends will lead to the abolition of quarantine restrictions and the resumption of economic activity, the beginning of a new construction season and fieldwork in agriculture, vaccination processes in the country and the world, as well as continued stimulation of consumer demand. In general, the Ministry of Economy expects a GDP growth of 4.1% by the end of the year.