NBU named the main reason for the economic decline

The main reason for the economic decline this year is a significant decline in investment.

The main reason for the decline of the Ukrainian economy in 2020 was the reduction in investment. This is stated in the message of the National Bank.

According to the State Statistics Service, in the third quarter, gross domestic product fell 3.5%.

At the same time, the decline in gross fixed capital formation deepened to 23.8% year-on-year.

“Companies refrained from investing due to uncertainty with the development of the pandemic. A significant increase in capital investment was demonstrated only by postal and courier activities. The indicator was also influenced by unresolved issues in energy alternatives, “says the review.

At the same time, the NBU declares the resumption of consumption growth. It responded to the easing of quarantine restrictions, increased income for citizens and the execution of budget expenditures. Overall, household consumption expenditure increased 1% year-on-year, while public sector consumption rose 8.2% year-on-year. Budgetary expenditures on road infrastructure, medicine and defense have increased significantly.

The central bank hopes that by the end of the year the economic recovery will contain the worsening epidemic situation and the increase in quarantine restrictions.

“A further increase in budget spending on social support, medicine and road infrastructure will be a definite compensator for the process,” the review says.

According to the Ministry of Economy, according to the October results, the decline of the Ukrainian economy slowed to 5.2% from 5.5% the previous month.

The department expects that in the first quarter of next year, the fall in GDP will be 3%, but by the end of the year it is expected to grow to 4.6%.

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