Consumers stir to life as Ukrainian GDP rumbles toward milestone

Bloomberg

The gloom is clearing over Ukraine’s beleaguered consumers.
Faced with a war on the border with Russia and a devaluation that sent inflation shooting past 60 percent, crumbling domestic demand kept the economy shrinking for eight straight quarters on an annual basis. A spending revival helped reverse the slump in the first three months of the year, according to a Bloomberg survey that predicts gross domestic product rose 1 percent.
“Consumer confidence is rising gradually on the back of low inflation, nominalwage growth and overall macroeconomic stability,” said Olena Bilan, chief economist at Dragon Capital in Kiev, said by phone.
“The recent increase in steel prices may have translated into higher salaries and capital investments.”
Ukraine’s economy is healing from the recession that followed its second street revolution in a decade. The hryvnia, which lost more than a third of its value last year, has stabilized, inflation has eased below 10 percent and a fragile cease-fire in the nation’s separatist conflict is encouraging companies to invest. Headwinds remain: even after a government revamp, political turbulence could still trigger new elections, while promised reforms must be accelerated to ensure the resumption of a $17.5 billion bailout.
Retail sales rose 1.6 percent from a year earlier last quarter after a 23.9 percent plunge in the same period of 2015. Industrial output advanced 3.7 percent following the previous year’s 20.5
percent dive. GDP gained 0.5 percent on a quarterly basis between January and March, a third consecutive increase, according to the survey.