Moody's: Ukraine growth to continue

In its annual report on Ukraine, Moody's Investors Service said its Ba3 foreign-currency country ceiling for bonds and positive rating outlook reflect the strong economic performance of the past five years that has produced much-improved debt and liquidity ratios.

The country ceiling is based on the foreign-currency government bond rating of B1 and a moderate risk of a payments moratorium in the event of a government bond default, the agency said. Ukraine's recovery has been driven by heavy industrial, energy-intensive sectors of the economy, Moody's said, adding that the recent growth has been driven by higher global prices for metallurgy and metal working.

Ukraine's final data for 2006 will likely show an economy that performed well, high consumer demand, strong investment in fixed assets and GDP growth that exceeded 5.5%, the agency said.

Although higher gas import prices have increased inflation and the current account deficit, Ukrainian industry seems to have absorbed them without losing its competitiveness. Despite an export base that lacks diversity, Moody's said it expects relatively strong growth to continue.

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