NBU improves inflation forecast for end of 2023 from 10.6% to 5.8% and GDP growth from 2.9% to 4.9%

The National Bank of Ukraine (NBU) improved the inflation forecast for the end of 2023 from 10.6% to 5.8% and GDP growth from 2.9% to 4.9%.

This is stated in the message of the NBU, Ukrainian News Agency reports.

The NBU improved the inflation forecast for the end of 2023 from 10.6% to 5.8%.

The main factor of this review is the impact of high harvests on the dynamics of food prices.

At the same time, the NBU raised the inflation forecast for 2024 - from 8.5% to 9.8%.

Acceleration in price growth next year will be driven by this year's low base of comparison for food prices, longer-term pressure on business costs due to revised assumptions about security risks, higher wages and an acceleration in administratively regulated price growth.

Inflation will further slow down to 6% in 2025.

This will primarily be facilitated by the expected decrease in security risks, which is assumed by the NBU forecast.

The restoration of optimal logistics and production in the post-war period will make it possible to increase the supply of goods and limit price pressure.

The expected decrease in global energy prices will also have a significant impact on price dynamics.

Economic growth will resume at the end of 2023 and will continue in the future.

The NBU improved the real GDP growth forecast from 2.9% to 4.9% in 2023.

Faster economic recovery is caused by a number of factors, among them - higher adaptability of business and population to war conditions, better than in the previous forecast, harvest estimates, expansion of alternative ways of export supplies, as well as more significant volumes of budget expenditures.

In 2024, the economy will grow by 3.6%, despite high security risks.

Economic growth will be facilitated by the further development of alternative supply routes and the maintenance of a soft fiscal policy, which will support consumer demand.

Instead, still complicated logistics and war-restricted investment will hold back the economy.

The NBU predicts acceleration of real GDP growth to 6% in 2025.

This will primarily be facilitated by the expected reduction of security risks.

It will be accompanied by the gradual return of migrants from abroad, the improvement of consumer and investment sentiments, the establishment of optimal logistics and production, and the reconstruction of damaged infrastructure.

As Ukrainian News Agency earlier reported, in April-June 2023, real gross domestic product (GDP), according to operational data, increased by 19.5% compared to the same period in 2022.

The World Bank improved Ukraine's GDP growth forecast by 1.5 percentage points to 3.5% in 2023.

The International Monetary Fund predicts that this year Ukraine's GDP will grow by 2% instead of falling by 3%.