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Ukraine´s economy in recession due to Covid, inflation

The Ukrainian economy has showed two consecutive quarters of negative economic growth, contracting by 1,2 % in the first quarter and by 0,8 % in the second quarter of 2021. On an annual basis, the economy has grown by 5,4 % after a quick bounce-back in the second half of last year from the economic slump triggered by Covid restrictions earlier in 2020.


A very slow vaccination campaign seems to result in increased worries about a new surge in delta-variant infections towards the end of 2021. This, combined with inflation worries, are weighing down expectations for further economic growth.


The Ukrainian central bank is forecasting 3,8 % economic growth for 2021, but warns that a month-long lockdown would shave off 0,6 % from those numbers.


Inflation appears to be a bigger headwind for economic growth at the moment, the Ukrainian central bank has already hiked base rates three times this year. Most likely further increases are to come. The rate currently stands at 8 %.

If you have questions about how the situation of the economy in Ukraine affects your business or your budgeting, feel free to contact us and our specialists will be happy to assist.


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