Economic Monitor Ukraine
WA 17 | May 2023
After Ukraine’s economy declined by 29.1% in 2022, economic growth is further impeded by war-related factors in 2023. Real GDP is forecast to increase by 1.8% yoy.
Capital controls and significant international aid are important factors to keep the exchange rate stable. Also, a significant budget deficit (28% of GDP) requires international financial support to stop reliance on monetary budget financing. As the national bank stopped this financing policy in 2023, inflation slowly declined but risks remain. Significant cuts of the key policy rate are unlikely.
In this context, the IMF programme is not only a crucial step to close the fiscal gap but also to coordinate reform and international aid efforts for Ukraine’s economic recovery and reconstruction.