Economy and politics

The Ukrainian government has released statistics on industrial production showing real industrial output continued growing well in May, adding 8.3% YoY and 2.2% MoM. In 5M08, real industrial growth totalled 8.0% YoY, the same figure as in 4M08. After a slowdown in industrial output growth in 2005 (+3.1% YoY), the numbers accelerated to 6.2% YoY in 2006 and 10.2% YoY in 2007. We are currently observing the normalization of industrial output growth, but the numbers are nonetheless remaining high.

May is the first month this year in which inflation was below 2% MoM. Official statistical data signals the beginning of the downward trend for the inflation in Ukraine in May. Monthly inflation reached 1.3% in may comparingto 3.1% in April. Since the beginning of the year CPI rose 14.6% and 31.1% since May 2008. We can finally see the picture when prices were stabilizing in almost all product groups, except meet and energy related transport services.

Growth in personal income accelerated to a record +46.2% YoY in April compared to +44.8% YoY in March. The average monthly income per capita in April reached USD 281 (UAH 1, 417). The share of salaries in aggregate income totalled 43%, social payments – 41% and income from property and other sources – 16%. All the income components grew firmly YoY, with social payments up 48% YoY, salaries up 44%, income on property rose to more than 60% YoY and dividend income and other sources of income grew 44% YoY in April 2008. Real disposable income increased 17.7% YoY in April 2008.

The National Bank of Ukraine will implement a direct FX interbank market in Ukraine, according to NBU Chairman Vladimir Stelmakh.

The official USD:UAH exchange rate has been reset at 4.852 for May 30, a 0.002 point increase. At the same time, the EUR:UAH FX rate dropped to 7.545 from 7.593 and the RUR:UAH FX decreased to 0.202 from 0.206 Thursday. The last time the NBU changed the USD:UAH rate was May 21, 2008 and, before that, April 21, 2005.

After Wednesday’s sudden revaluation of the official UAH rate, the Council of the National Bank vetoed the decision of the NBU board to appreciate the hryvnya.

The official USD/UAH exchange rate has appreciated 4.1% to 4.85 UAH.

Official statistics on Ukraine’s foreign trade show exports grew 28.5% to USD 13.8 bln in 1Q08.

Official unemployment rate continues falling, 1Q08 FDI hit historical record and surplus from 1Q08 foreign services reach USD 1.2 bln: according to the newly released official statistics of Ukraine. Official unemployment in April 2008 was only 2.2% versus 2.6% in April 2007.

EBRD’s yearly summit is being held in Kiev (Ukraine) this time. EBRD’ sand Ukraine’s top officials spoke during the event. EBRD voiced its plans to invest USD 1.5-1.7 bln into Ukraine this year and above EUR 1 bln per annum in the future. The key investments will be made in energy saving and infrastructure development projects.