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09KYIV1102, UKRAINE Q1 GDP FALLS 20.3 PERCENT

July 1, 2009

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Reference ID Created Released Classification Origin
09KYIV1102 2009-07-01 12:55 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Kyiv

VZCZCXRO3672
PP RUEHDBU RUEHIK RUEHLN RUEHPOD RUEHSK RUEHSL RUEHVK RUEHYG
DE RUEHKV #1102 1821255
ZNR UUUUU ZZH
P 011255Z JUL 09
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 8049
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE

UNCLAS KYIV 001102 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/UMB, EEB/OMA 
 
E.O. 12958: N/A 
TAGS: EFIN ECON ETRD PREL PGOV XH UP
SUBJECT: UKRAINE Q1 GDP FALLS 20.3 PERCENT 
 
Sensitive but Unclassified.  Not for Internet or Distribution 
Outside the USG. 
 
1.  (SBU) The Ukrainian State Statistics Committee published 
official 2009 macroeconomic figures on June 30.  The first quarter 
data, which had been withheld for weeks by the government of Prime 
Minister Yulia Tymoshenko, revealed a 20.3 percent contraction in 
GDP and a sharp fall in key sectors of the economy.  The GOU 
released its figures to correspond with the June 30 arrival of IMF 
mission head Ceyla Pazarbasioglu, who is in Kyiv to negotiate terms 
for disbursing the Fund's third loan tranche.  The IMF had been 
critical of Tymoshenko's refusal to reveal official economic 
statistics for the first quarter, saying that it could not 
accurately forecast annual GDP or the 2009 fiscal deficit.  The GOU 
had not released economic figures since it gave up monthly GDP 
reporting in February. 
 
2.  (SBU) With the GDP plunge of 20.3 percent year-on-year (y/y) in 
the first quarter of 2009, Ukraine suffered the worst economic 
contraction in the Central and Eastern European region.  The figure 
was in the range of what many private and official analysts had 
expected.  The Presidential Secretariat, the National Bank, and the 
State Accounting Chamber had all recently come forward with 
estimations ranging from 20 to 23 percent first quarter GDP decline 
(y/y).  The contraction in the first quarter was measured against 
the still robust first quarter growth of 2008.  Annualized GDP 
growth fell significantly during the course of 2008.  Hence most 
analysts expect GDP to contract by anywhere from 10 to 15 percent in 
2009 on account of the base effect in the data.  Before the most 
recent data were published, the IMF and World Bank had confided to 
us that they had already begun revising their 2009 GDP forecasts and 
were expecting a roughly 12 percent contraction, although officially 
they were still projecting an 8 and 9 percent drop in GDP, 
respectively. 
 
3.  (U) The construction sector was the hardest hit, falling 54.1 
percent in the first quarter (y/y), followed by the processing 
industry (36.5 percent decline) and utility services (19.3 percent 
decline).  Agriculture was the only sector that escaped a decline, 
having gained 1.3 percent in the first quarter (y/y).  Household 
consumption fell 11.6 percent (y/y).  Previously released figures 
had indicated that industrial output had declined by 32 percent for 
the first quarter (y/y), including a 39.7 percent fall in the 
chemical sector and a 43 percent drop in metallurgy. 
 
4.  (U) State Statistics Committee figures on unemployment also 
showed significant negative trends for 2009.  The unemployment rate 
(using the International Labor Organization's methodology) for the 
first quarter stood at 10.3 percent for those of working age, 
compared to 7.6 percent for the same period in 2008.  Unemployment 
had hit a low of 6.5 percent in the third quarter of 2008, just 
before the effects of the economic crisis began to reach Ukraine. 
 
PETTIT

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