Who saved the Ukrainian economy in 2020

Photo: Mohamed Hassan/Pixabay

Photo: Mohamed Hassan/Pixabay

Trade, construction and telecommunications worked out "net positive" and increased their contribution to the country's GDP. Many other surprises on New Year's Eve were presented by economic statistics and top participants’ testimonies.


Registrar indicators

Domestic trade significantly restrained the domestic economy from a precipitous decline during the crisis year of 2020. Ukraine's GDP would decline for the current year not by 4-5%, as economists now predict, but much lower.

If it were not for the vigorous growth of gross domestic product in this field, the country's total GDP would have declined into a much deeper hole. Ukraine would not have had a modest 2.87 trillion UAH of GDP for the first three quarters of this year, but a much more miserable cost of the national product.

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It is wholesale and retail trade that has become the absolute leader in increasing its contribution to the country's total GDP in 2020. In January-September, this industry alone, despite the crisis in the economy, generated 22 UAH billion more gross product than in the same previous period (in comparable prices, according to the State Statistics Service).

Trade turnover in some retail chains, as top managers say, has grown by 15-20% this year.

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The trio of other, so far less dynamic, locomotives of the domestic economy also worked out a slight "net positive". They, according to preliminary estimates, were construction, telecommunications and the management and defense sector. The value of goods and services produced in these areas also rose in three quarters. But the "rise in price" here is much less. The three of them contributed 14 billion UAH more to the country's GDP than in the previous January-September.

And all this is against the backdrop of the Ukraine's GDP decline during three quarters of 2020 by 107 billion UAH (against the corresponding indicator of last year, in comparable prices).

After all, most other sectors of the economy, if they did not find themselves at the bottom of an economic hole, simply could not noticeably improve their productivity in a year of a double crisis—economic and pandemic.

Although it should be noted that among those industries that slowed down a little during the crisis, in the 2nd half of the year another group of potential leaders began to stand out. Recently, good quarterly dynamics have been demonstrated, in particular, by the real estate, electricity and mining industries. The first one, in July-September, rose by 4% while the other two have almost reached last year's figures.

It would be unfair not to mention the role played by the powerful processing industry and agriculture. They are making a huge contribution to the national product manufacturing this year.

In particular, in the Q3 of 2020, agrarians with processing enterprises formed more than 23% of the country's GDP. And, in fact, they can quickly ramp up and join the cohort of the fatherland saviors.

The Ukrainian economy turned out to be more resilient to the crisis than expected at the start of the COVID-19 pandemic, the National Bank notes. The main factors of its satisfactory survivability are considered the stability of consumer demand in the country and a favorable external pricing environment.

Participants' testimonies

The most reliable summary can be made only by real subjects, heroes of events. Especially when they represent the leaders of economic development. And energetic entrepreneurs and large companies that managed to improve their performance several times and significantly surpass industry achievements, the year has revealed a lot.

The leading companies’ top managers convincingly record the upward movement in the Ukrainian economy vanguard sectors. And at the same time they see significant reserves for further growth. It is significant that, directly or indirectly, one of the most powerful reserves, according to experts, is public-private partnership in Ukraine.

Oleksandr Komarov
Oleksandr Komarov
Kyivstar CEO

The refarming of 900 MHz radio frequencies and the development of mobile Internet in rural areas have become the project of the year in the telecom industry.

In the center of the presidential program "Big Construction" there is the idea of uniting the country. New high-quality infrastructure, a new economy that is focused on growth. Sociological research confirms that over 90% of Ukrainians support this path.

In 2020, the team of Ukravtodor achieved a specific result: 4,000 km of state roads were reconstructed and built, as well as more than 100 artificial structures. For the first time in decades, the plans implementation rate reached 97%.

With the onset of the coronavirus crisis, we realized that it was a large-scale roads renovation that would become the main tool for overcoming its negative economic consequences. The IMF has been persistently advising Ukraine to invest in infrastructure since 2015.

In the Covid-19 era, public investment in construction is a universal recommendation from the OECD, the World Bank, the International Economic Forum, and even private consulting firms like Deloitte experts. After all, these are saved jobs, constant loads on industry, as well as money turnover in the economy.

A recent report by Ukraine Economic Outlook analysts confirms our expectations—"Big Construction» stopped the sharp drop in real GDP during the year. Thus, for example, in the Q3 there is already 8.1% of GDP growth. We will witness positive consequences in the next 10-15 years.

Oleksandr Kubrakov
Oleksandr Kubrakov
Ukravtodor CEO

In the center of the presidential program "Big Construction" there is the idea of uniting the country. New high-quality infrastructure, a new economy that is focused on growth. Sociological research confirms that over 90% of Ukrainians support this path.

In 2020, the team of Ukravtodor achieved a specific result: 4,000 km of state roads were reconstructed and built, as well as more than 100 artificial structures. For the first time in decades, the plans implementation rate reached 97%.

With the onset of the coronavirus crisis, we realized that it was a large-scale roads renovation that would become the main tool for overcoming its negative economic consequences. The IMF has been persistently advising Ukraine to invest in infrastructure since 2015.

In the Covid-19 era, public investment in construction is a universal recommendation from the OECD, the World Bank, the International Economic Forum, and even private consulting firms like Deloitte experts. After all, these are saved jobs, constant loads on industry, as well as money turnover in the economy.

A recent report by Ukraine Economic Outlook analysts confirms our expectations—"Big Construction» stopped the sharp drop in real GDP during the year. Thus, for example, in the Q3 there is already 8.1% of GDP growth. We will witness positive consequences in the next 10-15 years.

Konstantin Oleynik
Konstantin Oleynik
Head of Strategic Consulting Department, UTG

In the structure of population employment by type of economic activity, the top 5 sectors include trade, agriculture, industry, education and logistics. These fields, in my opinion, were the locomotives of the Ukrainian economy in 2020.

According to the results of 11 months of this year, retail trade shows growth, despite the forced quarantine and clothing and footwear stores closure in March-May.

The structure of sales has changed significantly, the average check value increased by the end of the year. Expenses on repairs and building materials, the purchase of furniture, household goods and large household appliances, on the home offices organization (computers and peripherals), and huge expenses also on medicine and pharmaceuticals have grown.

In terms of saturation with retail space, for example, Kyiv has already overtaken the main trading capitals of the CIS and a number of cities in Eastern Europe. And according to the number of sale contracts of apartments and individual houses in the capital region, we predict the establishment of new absolute records in 2020—42,600 contracts in Kyiv and 23,300— in the Kyiv region.


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