Economy 2024-02-15T05:05:02+02:00
Ukrainian news
After Deep Drop At Beginning Of War, Economy Of Ukraine Revitalizing - NBU

After Deep Drop At Beginning Of War, Economy Of Ukraine Revitalizing - NBU

economy, Ukrainian economy

After a deep drop at the beginning of the war, Ukraine's economy is revitalizing.

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

The NBU reported that economic activity in the 2nd-3rd quarters of 2022 slowly resumed due to the further liberation of Ukrainian lands, business adaptation to new conditions and the work of the "grain corridor."

The latter factor caused a positive contribution to GDP compared to the July forecast.

However, the existing logistical problems, especially in metallurgy, the destruction of capacities, in particular in the energy sector, and the decline in real incomes of the population restrain the recovery of the economy.

Agriculture also has a significant negative contribution to the change in real GDP, both due to lower yields this year and significantly smaller cultivated areas.

Because of this, the National Bank has only slightly improved the estimate of GDP fall this year - to about 32%.

The forecast easing of security risks from mid-2023 will be a key factor in the future economic recovery.

In particular, the full reopening of Black Sea ports will allow to significantly increase Ukrainian exports.

Significant budget support will stimulate consumer demand and investment in the reconstruction of the country.

At the same time, a significant scale of labor and production capacity losses, high world energy prices and significant import requirements during the post-war recovery phase will slow down the revival of the economy.

Under such conditions, the growth rate of Ukraine's GDP in the following years will be restrained - at the level of 4-5%.

Limited export opportunities due to the consequences of the war, high migration and significant import requirements of the economy for reconstruction will lead to the return of the current account deficit in subsequent years.

International financial assistance and the revival of exports contributed to the growth of foreign exchange revenues to Ukraine.

Since the start of the full-scale invasion, official funding has reached about USD 23 billion.

The lion's share of these funds has come in the form of grants in recent months.

Exports of goods in the autumn reached the highest values since the beginning of the war thanks to the launch of the "grain corridor" and a record increase in electricity supplies to the European Union.

Adjustments to the official hryvnia exchange rate and the abolition of preferential taxation slowed down the resumption of imports of goods.

As a result, a significant current account surplus was formed.

From next year, the current account will return to the deficit.

On the one hand, in 2023-2024, high volumes of international financial assistance are expected, in particular in the form of grants.

The forecast improvement in the security situation will contribute to a further increase in exports, and transfers of labor migrants will remain no lower than the pre-war level.

On the other hand, rebuilding the country will require significant volumes of imports.

In addition, due to still high security risks, the level of migration will remain significant, which will be reflected in significant volumes of imports of services under the article "Travel."

The National Bank is ready, if necessary, to raise the key rate beyond the forecast, and will further take additional measures to protect international reserves and maintain the manageability of inflation processes.

As Ukrainian News Agency earlier reported, in April-June 2022, real gross domestic product (GDP), according to operational data, decreased by 37.2% compared to the same period in 2021.

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