Economic and Political Situation in Ukraine

Tymofiy Mylovanov, U of Pittsburgh

Also, VoxUkraine+iMoRe teams

Yuriy Gorodnichenko, UC Berkeley

Yuriy Zhukov, U of Michigan

Natalia Shapoval, Kyiv School of Economics

Dmitry Ostapchuk, VoxUkraine

Mikhail Minakov

Dynamics of the violence

Macroeconomic Outlook

OUTPUT

-30

-20

-10

010

pe

rcen

t, y

ea

r on

ye

ar

2013Q12013Q2

2013Q32013Q4

2014Q12014Q2

2014Q32014Q4

2015Q12015Q2

2015Q3

OUTPUT

Economy was in a recession before the Maidan movement.

-30

-20

-10

010

pe

rcen

t, y

ea

r on

ye

ar

2013Q12013Q2

2013Q32013Q4

2014Q12014Q2

2014Q32014Q4

2015Q12015Q2

2015Q3

OUTPUT

Free fall until early 2015.

-30

-20

-10

010

pe

rcen

t, y

ea

r on

ye

ar

2013Q12013Q2

2013Q32013Q4

2014Q12014Q2

2014Q32014Q4

2015Q12015Q2

2015Q3

OUTPUT

Notes: Real GDP in 2015Q3 grew 0.5% relative to 2015Q2 and preliminary data suggest

1.5% growth in 2015Q4 relative to 2015Q3.

-30

-20

-10

010

pe

rcen

t, y

ea

r on

ye

ar

2013Q12013Q2

2013Q32013Q4

2014Q12014Q2

2014Q32014Q4

2015Q12015Q2

2015Q3

OUTPUT VS. PRIVATE CONSUMPTION

Massive fall in private consumption, a sign of economic disaster

-30

-20

-10

010

pe

rcen

t, y

ea

r on

ye

ar

2013Q12013Q2

2013Q32013Q4

2014Q12014Q2

2014Q32014Q4

2015Q12015Q2

2015Q3

GDP

Private consumption

INFLATION

-50

510

15

pe

rce

nt, m

on

th o

n m

onth

2013 2014 2015 2016

PPI CPI

INFLATION

Spike (one-time!) in early 2015

-50

510

15

pe

rce

nt, m

on

th o

n m

onth

2013 2014 2015 2016

PPI CPI

INFLATION

Disinflation and deflation recently

-50

510

15

pe

rce

nt, m

on

th o

n m

onth

2013 2014 2015 2016

PPI CPI

Political Outlook

Dynamics of the violence

Реформи?

President consolidates power

Political outlook for Ukraine

Weak majority

President continues to consolidate power

No signs of substantive polarization

No signs of change of pace in reform legislation

No signs of change in fighting corruption

Progressive legislation passed

The situation continues to be fragile

elections?

Ukraine needs to clean up governance in order to

realize growth potential