Ukraine's economy is poised to rebound in the 3Q in yoy terms, in our view, after two consecutive quarters of contraction. The improvement, however, will come solely from this year's expected bumper grain harvest and is likely to be temporary. We don't see fundamental preconditions for a turnaround in the GDP trend through the year-end. External markets have remained depressed (declines in the export-oriented metallurgy and machinery sectors deepened to 11.2% yoy and 18.1%, respectively, in May). Household demand is also losing steam – retail trade growth weakened to 5.3% yoy in May from 12.0% in January. Overall, we maintain our previous forecast and see GDP contracting 0.5% yoy in 2013.

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