STRONG ECONOMIC GROWTH CONTINUES IN UKRAINE…

The strong economic growth which took hold in Ukraine during the first half of 2000 showed no sign of slowing in the third quarter: GDP grew 5 percent in the first nine months of the year. Industrial output grew nearly 12 percent during this time, with industrial growth accelerating in the third quarter. Ukrainian industry continues to benefit from a revival in exports, which grew by 25 percent during January-August. Domestic spending also pulled the recovery along: Retail sales increased by 9 percent during the January-July period, thanks to a 12-percent growth in disposable incomes. And fixed investment during the first seven months was up a staggering 21 percent. In line with IMF requirements, Kyiv managed to generate surpluses on both the central and consolidated government budgets through August.

If the Ukrainian economy slows in the fourth quarter, it will be due to the agricultural sector. Like many other CIS and East European countries, Ukraine is suffering a drought. Agricultural output fell 6 percent in the months from January through July, before the fall harvest began, and further declines are expected in the third and fourth quarters. But even with these problems in the farm sector, GDP growth is unlikely to drop below 4 percent this year. This marks a sharp improvement on Ukraine’s economic performance during the 1990s, when GDP fell by more than 50 percent. By the same token, many other CIS economies have managed to stage strong–but temporary–recoveries from the depths of the post-communist output collapse. Whether Kyiv can parlay this growth into a long-term economic recovery remains to be seen.

…BUT INFLATION REMAINS A PROBLEM.