Ukraine’s financial sector bites the bullet

Ukraine’s economy contracted 1.1% during the first quarter of 2013. The gross domestic product (GDP) in current prices amounted to UAH 301.598bn in Q1. In q/q terms, the GDP grew by 0.6%, which was predetermined by a seasonal factor. GDP per capita amounted to UAH 6,624, down by 0.96% y/y.

The country’s economic growth slowed to 0.2% in 2012 from 5.2% in 2011. After first-quarter GDP data was released, most of the rating agencies and global financial institutions lowered their full-year GDP growth forecast for Ukraine. The GDP is expected within a range of a growth of 1.1% to a contraction of 0.5%.

The World Bank believes that the high fiscal deficit, continuous current account deficit and high external debt remain the main challenges for Ukraine. In addition, the national currency de-facto peg to the dollar and declining foreign reserves also remain a concern for the authorities.

Read more in Intellinews’s comprehensive report, Ukraine’s Financial Sector>>

 

Ukraine’s food sector growing hungry

The  European Bank for Reconstruction and Development (EBRD) passed a negative economic growth outlook for kraine for both 2012 and 2013 citing faster decline in industrial production in the last two quarter of 2012. In its latest Regional Economic Prospects Report published in January, the EBRD said it expects Ukraine’s economy to post a zero growth in 2012 and expand by 1% in 2013, cutting its forecasts from earlier expected growth of 1% and 2.5%, respectively. Ukraine’s industrial production in 2012 contracted by 1.8% from 2011 with the annual fall in December deepening to 7.6% from 3.7% in November, according to data from the State Statistics Service. Agricultural production is no exception, declining by 4.5% y/y in 2012 versus a 19.9% growth in 2011. Crop production last year fell by an annual 8.2%, with commercial farms’ production going down by 10.9% and that of private farms decreasing by 4.6%, – animal goods’ production, on the other hand increased by 3.8%. Specifically, output of commercial farms was higher by 7.6% and of private farms by 1.2%. According to
preliminary data, the strongest annual output growth was registered in Khmelnytsky (+12.9%), Ternopil (+9.8%) and Kyiv (+9%) regions, while the steepest decline was reported in the regions of Dnipropetrovsk (-20.3%),
Zaporizhzhia (-19.2%) and Odesa (-19.1%).

Much more in the Intellinews report: Ukraine Food Sector Report

 

Rise in Romania’s public debt eases as fiscal consolidation advances.

Romania’s public debt edged up a modest 0.1pps ytd to 34.8% of GDP [ESA methodology] at the end of October 2012 – after it nearly tripled since the end of 2008. The domestic public debt expanded sharply by more than three times while the external public debt advanced at a slower pace yet still more than doubling. Notably however, a large part of the domestic debt is denominated in foreign currency – actually more than half of it [54.8% at the end of October].

Romania public debt

Much more in the EMD report: Romania Country Report

 

Romania’s central bank admits inflation slips outside target band by end-2013

Romania’s central bank has raised the year-end inflation projections by 1.9pps to 5.1% y/y for 2012 and by 0.5pps to 3.5% y/y for 2013, according to its Quarterly Inflation Report released on Nov 7. The IMF expert team visiting Romania expressed concerns with the price stability.

Consumer price inflation eased to 5% y/y in October after peaking to 5.3% y/y in September, the statistics office reported. CORE2 inflation was 3.2% y/y in September. The average consumer prices in the 12 months ending October were 3.1% up y/y, accelerating from 3% y/y growth registered last month.

 

 

 

 

PLUS:
FOCUS STORY: Are there grounds for euroscepticism in Romania?

This is only a small extract of the insights in the new Intellinews : Romania Country Report; read more and purchase now>>

 

Ukraine’s currency may have to be devalued

The IMF has maintained its GDP growth forecast for 2012 at 3% y/y compared to 5% growth recorded in 2011. In 2013, the GDP growth is expected to reach 3.5%. The global slowdown of economic growth has a great impact on the Ukrainian economy as one of the CIS energy importing economies, the IMF noted. Moreover, the IMF warns about risks in case of intense crisis in the Eurozone. For the energy importers in the region, direct trade spillovers from a further escalation of euro crisis would also be sizable given that Europe is the most important trading partner outside the region. If downside risks materialize, external balances would deteriorate, which would tend to exacerbate capital outflows and put pressure on currencies, especially among energy importers with large external financing needs (Ukraine).

Rating agency Fitch believes that the local currency hryvnia may fall 10% by the end of the year due to “fairly weak” confidence in the currency. A slight devaluation and adopting to more flexible exchange rate would benefit the country, the agency noted. At the same time, officials, including PM Mykola Azarov assures of a stable hryvnia and brushes off economic preconditions for devaluation. The hryvnia, which has declined 1.2% against the dollar this year, was devalued by almost 35% in Q4 2008.

We believe that Ukraine will have to devalue national currency in the next few months in order to support competitiveness of exports and prevent the growth of foreign trade deficit. If the economic situation worsens, the drop in NBU’s reserves may reach critical level and devaluation may be inevitable.

The outlook on domestic banking system remains negative, according to Moody’s Investors Service. The rating agency believes the challenging operating environment and weak economic growth through 2013 as main causes. The real GDP growth is expected to decelerate to around 2.5-3.0% in 2012. According to the rating agency, this weak economic performance will continue to weigh on banks’ credit growth and financial positions over the next 12-18 months.

 

 

 

 

Much more in the Intellinews report: Ukraine Financial Sector Report

 

Romania’s economy wears weary outlook

Romania’s economy increased by 0.7% y/y in H1 and will end with  negative for the year, less than -1%.  Bullish expectations were ruined by  poor use of EU funds and by  below-average agricultural production. The IMF and the government expect a much stronger advance in 2012 of 2.5%, according to the Fund’s World Economic Outlook. But even this will not help the country return to  pre-crisis 2008 GDP levels.

Romania’s statistics office revised the estimate for the country’s Q2 GDP to 1.1% y/y, down from 1.2% y/y previously announced on September 6, according to the newly introduced T+95 estimate. The adjustment is minor and does not send positive signals for the country’s economic growth,  already expected to slow  in H2.

These are only a few of the insights in the new IntelliNews : Romania Country Report. Learn more and purchase now>>

 

Romania’s GDP mirage: fact or fiction?

Romania’s seasonally-adjusted GDP edged up by 0.5% q/q in Q2, after it has stagnated for three years around the same level. Against the past quarter, the domestic demand strengthened robustly driven by both consumption (1.6% up q/q) and gross fix capital formation (gfcf, 4.4% up q/q). On the opposite, the external demand weakened visibly by 1.4% q/q. The imports edged up by 1.2% q/q contributing, besides the export’s weakening, to the deterioration of the external balance.

GDP and main elements by utilisation, quarterly, seasonally adjusted [2000=100]

These are only a few of the insights in the new IntelliNews : Romania Country Report. Learn more and purchase now>>

 

A quick peek into Romania’s economy and banking figures

The stock of provisions held by the Romanian banks increased by RON 3,161mn (EUR 722mn, or some 0.9% of their assets) in the first quarter of 2012, according to IntelliNews calculations based on the central bank data. Romania’s non-performing loans ratio reached 15.88% at the end of March, up from 14.33% at the end of 2011 and 12.71% at the end of March 2011. The loan loss provision cost thus neared the record level of EUR 747mn registered back in the second quarter of 2010, marking a visible deterioration from the moderate EUR 171mn provision cost in Q4/2011 or the average quarterly provision cost of EUR 416mn last year.

The banks derived an aggregate profit of EUR 28mn in Q1, according to IntelliNews calculations. The aggregate profit was close to zero in the final quarter of last year, according to adjusted data, while the banks incurred losses of EUR 181mn in full 2011 – compared to a combined loss of EUR 79mn reported the under preliminary [unrevised] data. The Romanian banks also posted an aggregate loss of EUR 123mn in 2010.

These are only a few of the findings in the new Intellinews Romania Country Report. Learn more and purchase now>>

 

Ukraine agriculture feeds its economy

Ukraine claims its position as one of the leading agricultural countries in the world.

The country possesses 30% of the world’s black earth– the most favorable soil for agriculture.

In 2011, the agricultural production increased by 17.5% year over year, reported the State Statistics Service. The highest growth was seen in the north eastern Ukraine (Kharkiv, Poltava, and Symy regions). Interestingly, both agricultural firms and households experienced production growth of 23.8% and 12.3%, respectively.

The sector is making more money.  In 2011 State Statistics Service data show  agricultural profits rose by 52.3% year over year, to UAH 19.8bn (USD 2.5bn).  Not only that, it seems more farmers are getting better at becoming profitable.  Income 79% of enterprises engaged in agricultural production and services we profitable.

The EBRD believes Ukraine has great potential in agriculture, and should be attracting investors  Indeed, they are unafraid to put their money where their mouth is.  Others are less intrepid.  Frequent changes in legislation tend to impede investment.

These are only a few of the insights found in the June 2012 number of the  IntelliNews Ukraine Food SectorReport,.. Read more and purchase>>

 

Fiscal slippage risks remain high in Romania

Public debt service surged by 161% year over year in April and the co-financing also surged by 106% year over year as the government had to cover from own funds the sluggish payment flow from the EU to keep the projects on track. The government hiked the year-end cash deficit target to 2.2% of GDP from 1.9% previously, but meeting the new target is very unlikely.

The first-quarter deficit target was met only due to unsustainable policies – companies were forced to pay in advance their profit tax for the quarter, while the payment arrears of the central and local governments increased, the country’s independent fiscal supervisory body explained.

These are only a few of the insights from the IntelliNews Romania Country Report, May 2012. Read more and purchase>>