KYIV, May 6 – Ukraine’s economic growth slowed to 2.4% on the year in the first quarter from 3.5% the previous quarter as warmer weather had reduced demand for energy, the National Bank of Ukraine reported Monday.

This is the first time the NBU has assessed weather conditions in its quarterly economic performance reports, a common practice in developed economies.

The warmer weather in February and March reduced demand for energy, but had accelerated performance of the construction sector, the NBU said.

“As a result, in general, the contribution of weather conditions to the base industries production index in the first quarter of 2019 was negative, but insignificantly – 0.2 percentage points," the NBU said.

The farming sector, a major driver of economic growth over the past several quarters, has lost its steam as now the sector is compared with strong performance a year ago.

"The contribution of the agricultural sector decreased as the effect of the record harvest had waned as anticipated. In addition, industrial sector performance has weakened," the NBU said.

In particular, a significant drop in the chemical industry continued throughout most of the quarter, primarily against the background of repair work at individual plants, the central bank said.

The introduction of a ban on the import of certain types of machine-building products by Russia at the end of 2018 was one of the factors for the further decline in production volumes in the machine-building industry, the NBU said.

The growth rate of the metallurgical sector, despite the noticeable acceleration in March (against the background of completion of the planned repair work at several large mining and metallurgical enterprises), according to the results of the first quarter of 2019, was close to zero.

"Domestic demand (mainly consumption by households and investment by businesses) remained the main driver of economic growth," NBU said.

"The sustained growth in consumer demand was evidenced by growth pickup in retail trade turnover, which was propped up by increases in real wages and pensions. Construction output grew at a faster clip, reflecting sustained investment demand and favorable weather conditions," NBU said.

Ukraine’s economic growth is likely to slow down to 2.5% on the year in 2019, but will accelerate to 2.9% and 3.7% in 2020-2021, respectively, the NBU said. (tl/ez)