Ukrainian GDP contraction slowed to 35%-40% in May - NBU

MOSCOW. June 16 (Interfax) - The regions are helping the Ukrainian economy gradually bounce back from the point of its biggest decline in March; as a result, the pace of economic contraction in Ukraine in May 2022 (as compared to May 2021) slowed to 35%-40%, National Bank of Ukraine (NBU) Deputy Governor Serhiy Nikolaychuk said.

"According to the NBU estimates, GDP fell by 44% in March and narrowed the decline to 35%-40% in May," the Ukrainian Finance Ministry quoted Nikolaychuk as saying at a workshop with foreign investors on Wednesday.

The Ukrainian media quoted Nikolaychuk as saying that one can only rely on indirect data to make GDP estimates.

When commenting on inflation, which grew 18% in May in annual terms, Nikolaychuk said that inflation is mainly due to disruptions in supply chains and logistics problems. Inflation is the highest in Ukraine's southern regions, while in the country's western regions inflation is the lowest, and, in fact, is very close to the level of inflation in neighboring countries, he added.

The NBU deputy governor put the population's inflationary expectations at around 20%, which was one of the arguments behind the NBU's decision to hike its key interest rate from 10% to 25% with the aim of making the yield on assets positive in real terms and easing inflationary pressure.

As reported, the State Statistics Service of Ukraine estimated that the country's GDP shrank by 15.1% in the first quarter of 2022 year-on-year, following a 6.1% growth in the fourth quarter of 2021.

The World Bank, for its part, expects Ukraine's economy to contract by 45.1% in 2022. The NBU has so far refrained from any precise projections, but believes that economic contractions will be of at least 30%.

According to State Statistics Service data, Ukraine's GDP grew 3.4% in 2021, following a 3.8% decline in 2020. Its nominal volume stood at around $200 billion in 2021.