POLL-Ukraine to face sharp economic downturn in 2020 due to coronavirus

Credit: REUTERS/GLEB GARANICH

By Natalia Zinets

KIEV, April 3 (Reuters) - Ukraine's economy will shrink 3% this year, reversing last year's growth, due to the economic fallout from the coronavirus, a Reuters monthly poll of analysts showed on Friday.

The analysts see first quarter growth slowing to 0.2% from 2.9% in the same period last year and expect gross domestic product to decline after that.

"The heaviest losses for the economy are expected in the second quarter of 2020," said Oleksiy Blinov from Alfa-Bank Ukraine.

Blinov said the contraction in the second quarter could vary from between 3% and 15% depending on how long the government restrictions on movement, transport and business operations last.

Ukraine's economy grew 3.2% last year. The poll's prediction for a contraction in 2020 would be the first full-year decline since 2015 when GDP shrank by 9.8% in the wake of Russia's annexation of Crimea and a military conflict with Russia-baked separatists in industrial eastern Ukraine. ​

Early last month the Ukrainian authorities banned or restricted many business activities except critically important services such as food production and sales, pharmacies, hospitals and police, in order to contain the spread of the coronavirus. The country has reported 942 cases of the virus and 23 deaths from the disease.

On Friday, a few weeks before Easter festivities when Ukrainians would usually congregate in church ceremonies, the government announced even tougher restrictions.

Starting from April 6, people are prohibited to go outside without medical masks and identity documents. People can only go outside alone or in pairs. The restrictions will be reviewed at the end of April.

Hanna Cherednychenko from the International Centre for Policy Studies think tank said key export industries such as steel would suffer from shrinking demand from the European Union, and that workers would receive lower wages.

The analysts forecast industrial output to fall 5% in 2020.

"With each subsequent week of quarantine, the economic downturn will increase with a progressive trend," Blinov said.

ata

(Editing by Matthias Williams and Susan Fenton)

((Natasha.Zinets1@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.