Economic recovery firmly in sight
Ukraine’s real GDP declined by an estimated 4.6% in 2020 due to the economic impact of the pandemic. In international comparison, this decline is rather moderate. In 2021, the economy will expand by 4.3%, reaching pre-crisis real GDP levels only in 2022. Despite the crisis, the external position remained stable, benefiting from a positive terms of trade shock. The flexible exchange rate worked well as a shock absorber and supported the accumulation of international reserves, which reached USD 29.1 bn in December 2020, an eight-year high. Inflation reached 5.0% at the end of 2020, right at the target. In 2020, the budget deficit increased considerably and will decrease only slightly in 2021. Overall, these indicators show a stable macroeconomic environment despite the crisis. Due to the economic reforms of recent years, Ukraine faced this crisis much better prepared than past ones. For deficit and refinancing purposes, and as a policy anchor to accelerate further economic reforms, a continuation of the IMF-programme is of key importance.