GDP contracted by 18%y/y in 2Q09 according to preliminary estimates by the State Statistics Committee (Ukrstat). GDP fell by 20.3% in the first quarter of this year. Ukrstat also reported that industrial production fell by 26.7%y/y in July following a decline of 27.5% in June. Furthermore, retail sales decreased by 15.9%y/y in Jan-Jul-07 compared to a decrease of 15.2% in 1H09. On related news, Prime Minister Yulia Tymshenko said that the government still expected GDP to grow by 3% in 2010. Our view: The preliminary GDP estimate for 2Q09 seemingly suggests that the worst might be over. However, it is difficult to provide a firm assessment in the absence of a detailed breakdown (which is due to be released on 30 September). Retail sales and industrial output figures imply that the recession probably bottomed out in the second quarter of 2009, which would lend support to the view that the recession reached its nadir in 1H09. However, there is little evidence to underpin Ms Tymoshenko's forecast of positive growth in 2010. Indeed, we expect the economy to remain in recession in 2010 and to return to positive terrain only in 2011.