Ukraine: An economic & political obstacle course

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Strong GDP recovery in 2016. Economic recovery accelerated into the end of last year, GDP expanding by 4.7% YoY in Q4. That brought full-year growth to 2.2%, reversing the near 10% contraction of 2015. That trend continued into 2017 but much of it is based on one-off factors.

Blockade a cause for concern. The trade blockade with Donbass is a concern; if it remains for long enough, it will hurt the economy. 2017 growth scenarios range from 1.5% to 3.0%. We have adopted a cautious approach with 2.1% for 2017, rising to 3.0% in 2018.

Agriculture has been a big winner. Ukraine became the third-largest exporter of agricultural goods to the EU last year. Its grain harvest increased 27.5% YoY in 2016.

State debt at 76% of GDP. At end-December, total external state debt equaled approximately 76.5% of last year’s GDP.