Economic Monitor Ukraine
Russia`s full-scale war has been causing dramatic human, social, and economic suffering. GDP is forecast to decline by 32% yoy in 2022. Public finance is strongly hit. The budget deficit stands at USD 5 bn per month covered by NBU’s monetary financing and intern. support (grants and loans). Thereby, inflation has strongly accelerated and is expected to exceed 30% yoy in December. The NBU introduced a fixed exchange rate regime and capital controls to set a nominal anchor. A strong decline in reserves (USD 7 bn) necessitated a devaluation of the exchange rate in July. Russia’s blockage of seaports leads to a strong export decline, increased devaluation pressure, and has global implications.
WA 16 | August 2022
Macroeconomic Analyses and Forecasting
Overview
- Russia`s full-scale war has been causing dramatic human and economic suffering. GDP is expected to decline by 32% yoy in 2022, the unemployment rate is currently at 35%
- Due to very high uncertainty, a comprehensive forecast for 2023 is hardly possible
- The war forced 6 m people to flee abroad and further 6 m are displaced within Ukraine as 20% of
- Ukraine’s area is occupied and economic damage recorded at USD 114 bn
- Public finances are strongly hit as the budget deficit stands at USD 5 bn per month
- Deficit is funded by NBU’s monetary financing and intern. support (grants and loans)
- The NBU introduced a fixed exchange rate regime and capital controls. A strong decline in reserves (USD 7 bn) necessitated a devaluation of the exchange rate in July
- CPI is expected to exceed 30% yoy in December
- Strong decline of foreign trade, blockage of seaports has global implications
Special Topics
- Financial aid. Grants are preferred over loans to reduce future debt burden
- Reconstruction. Effort requires coordination to link support with reforms and investment
- International food security. Russia’s port blockage/destruction cause food instability to rise
