NBU Improves GDP Growth Forecast From 0.3% To 2% In 2023

The National Bank has improved its GDP growth forecast from 0.3% to 2% in 2023.

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

"Given the rapid recovery of the energy system, as well as soft fiscal policy, the forecast for economic growth in 2023 was improved from 0.3% to 2.0%. Under the implementation of assumptions about the security situation, significant electricity shortages are not expected in the future, except for local and situational deficits in the second half of the year. At the same time, an increase in budget expenditures against the background of significant amounts of international financial assistance will support economic activity and consumption," the statement said.

Reducing security risks from next year, which is assumed in the NBU baseline forecast scenario, will contribute to accelerating economic growth - up to 4.3% in 2024 and up to 6.4% in 2025.

Thus, the de-occupation of territories and the full opening of Black Sea ports will allow to gradually increase industrial production and boost yields.

Besides, domestic demand is expected to expand due to the return of some of the forced migrants.

Net inflow of currency to Ukraine remains due to significant amounts of international assistance.

A significant current account deficit is expected in 2023.

"This, in particular, is due to an increase in imports against the background of a gradual recovery in domestic demand, the costs of a significant number of forced Ukrainian migrants abroad and still restrained exports due to a decrease in yields and limited logistics routes. At the same time, the receipt of international assistance will compensate for these factors," the National Bank reports.

In total, this year, the volume of revenues from international partners may exceed USD 42 billion.

Proceeds from partners, in particular, will contribute to the growth of international reserves to more than USD 35 billion later this year.

This will strengthen the NBU's ability to continue to maintain exchange rate stability and gradually mitigate currency restrictions.

Since 2024, the increase in export flows and the gradual return of forced migrants home will help reduce the current account deficit, which, however, will continue to overlap with significant volumes of external official funding.

This will keep the volume of international reserves at a relatively comfortable level.

As Ukrainian News Agency earlier reported, in 2022 the real gross domestic product decreased by 29.1% compared to 2021 (at constant prices of 2016) to UAH 5,191.028 billion (at actual prices) (excluding the temporarily occupied territories of the Autonomous Republic of Crimea and Sevastopol).

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