Boston, MA -- (SBWIRE) -- 08/05/2013 -- We have downgraded our outlook for real GDP growth in Ukraine in 2013 and 2014, and now expect GDP to contract by 1.4% in 2013 and grow by just 1.0% in 2014. We maintain our expectations for growing external account imbalances to drive a devaluation of the hryvnia by the end of the year.Additionally, Ukraine's GDP per capita is expected to remain one of the lowest in Europe over the decade ahead. Without institutional and economic reform, Ukraine's current economic growth model will prove unsustainable over the coming 10 years.

Headline Industry Data (local currency)

- 2013 per capita food consumption = +9.0%; five-year forecast to 2017 = +49.4%
- 2013 alcoholic drinks value sales = +10.1%; five-year forecast to 2017 = +56.0%
- 2013 soft drinks value sales = +12.3%; five-year forecast to 2017 = +56.0%
- 2013 mass grocery retail = +11.9%; five-year forecast to 2017 = +64.2%

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Key Company Trends

MHP To Benefit From Poultry Demand: Ukraine based poultry firm MHP will benefit from growth in export demand over the coming years and will continue to dominate the sector in terms of sales. We maintain our forecast for Ukrainian poultry production to grow 8.0% year-on-year to 938,000 tonnes in 2012/13 on the back of increased feed supply and greater export demand. We expect the country's grain crop to rebound significantly in 2013/14 thanks to improved soil and weather conditions. This is likely to take down local grain prices and ensure cheap feed supply for local poultry producers. Also, the recent authorisation for Ukraine to export poultry to the EU will boost demand for its product, especially as the country's output is particularly competitive compared with Western Europe.

Auchan Gains Approval For Real Takeover: At the end of 2012, German retailer Metro reached a deal to divest its Real hypermarket business in eastern Europe to France-based Auchan in a deal worth EUR1.1bn. The sale in the Ukraine received approval from the country's regulatory authorities in spring 2013, meaning that Auchan's hypermarket portfolio in the country is increased to 10 stores. Meanwhile, there have been unconfirmed reports that Auchan is planning to launch its Auchan City banner in Ukraine, following the example of the Russian market.

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