Economic Monitor Ukraine
After the sharp decline following the Russian attack last year, moderate positive growth rates of 4.1% and 5.5% can be expected again for 2023 and 2024. However, the country’s economic situation remains difficult overall – as expected – and much depends on the continued support of Ukraine’s international partners.
WA 18 | November 2023
Macroeconomic Analyses and Forecasting
Overview
- Real GDP: After a decline of 29.1% in 2022, moderate growth of 4.1% and 5.5% is projected in 2023 and 2024, respectively, but GDP is expected to remain 22% below pre-war level in 2024.
- Inflation decelerates stronger (Oct-23: 5.3%) than expected. The monetary policy easing cycle has accelerated.
- External sector: International financial aid has stabilised external balances, allowing for a gradual liberalization of capital controls and a return to a managed floating exchange rate regime.
- Public finances: Significant budget deficits amounting to ca. USD 40 bn in 2023 resp. 2024, implying further reliance on foreign aid.
- Foreign trade: Exports lag imports, which are recovering, leading to increasing trade balance (and current account) deficits.
- IMF programme: Anchor for macroeconomic stability to coordinate reforms and international aid efforts
Special issues
- Ukraine Facility of the EU: Support for budget and accession, but not sufficient to close fiscal gap
- Banking sector: Stable functioning so far, but hardly prepared for its future role in reconstruction
- Business stimulation: Comprehensive response to challenges, but further measures and reforms needed
- Economic reconstruction: Progress in coordinating support, but financing issues still unresolved
