Daily Times

KIEV: Ukraine said Tuesday its economy expanded at a surprisingly fast pace of nearly five percent in the fourth quarter as it continued its steady climb out of a two-year recession.

The State Statistics Service said gross domestic product (GDP) growth reached 4.7 percent between October and December 2016 compared to the same period a year earlier. It provided no other comment.

But analysts said they were taken aback by such a large jump in the war-scarred former Soviet republic. “I was surprised,” Olena Bilan of the Dragon Capital investment company in Kiev told AFP. “My estimate was 3.3 percent.” She attributed the figure primarily to greater housing demand and construction. “That made up about half the figure — maybe a little more,” she said.

Bilan said other sectors contributing the most were industrial output and consumer demand. Another factor was agriculture — a vital industry that once gave Ukraine the nickname “the breadbasket of Europe”. The State Statistics Service did not provide a growth figure for all of 2016 but government officials expect it to be about one percent.

Analysts said it is relatively easy for Ukraine to achieve a short-term economic boom because growth contracted by about 17 percent between 2014 and 2015 when its nearly three-year war with Russian-backed insurgents was at its worst. This means that it is building from a very low base and that the economy will not continue to grow as quickly going forward. Central bank officials believe any expansion will probably be limited to about two percent in 2017.

Ukraine has undergone some urgent economic restructuring and belt-tightening measures to secure a $17.5-billion (16.5-billion-euro) loan from the International Monetary Fund in 2015. That money was supported by additional funds from Kiev allies such such as the European Union and the United States. Unpopular measures like steep hikes for once-subsidised utility bills have drawn periodic street protests.

Pro-Western Ukrainian President Petro Poroshenko has withstood the pressure and picked a government that could push the IMF’s prescriptions through parliament.