(Bloomberg) -- Ukraine’s economy returned to growth on a quarterly basis after two consecutive contractions, but the pace of expansion was muted by the raging coronavirus pandemic. 

Third-quarter gross domestic product rose 1.4% from the previous three months, following a 0.7% drop from April to June, preliminary data showed on Monday. On an annual basis, it rose 2.4% -- well below economists’ estimates -- compared with 5.7% in the second quarter.

Ukraine’s economy was driven by strong consumption and a solid grain harvest. But high energy costs slashed production at key industries and a new wave of coronavirus-related lockdowns brought on by a low vaccination rate stifled the recovery.


  • The tight monetary policy of Ukraine’s central bank, which raised interest rates four times this year and may do so again next month, is also affecting growth.
  • The central bank now expects annual economic growth of 3.1% this year, compared with a previous forecast of 3.8%. The pace of expansion is crucial for holders of Ukraine’s GDP warrants, who will only be paid if the advance exceeds 3%.
  • Due to a delayed harvest, the “positive impact of a record harvest on the economy will materialize later this year, causing real GDP to accelerate to above 6% y/y in 4Q,” said Olena Bilan, Chief Economist at Dragon Capital.

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