Page 4 - Ukraine OUTLOOK 2023

Leaders in the West are starting to wake up to the fact that this war
could drag on for years.

Ukraine’s economy has been devastated by the war with Russia
and as 2022 comes to an end the situation has only been getting worse
as Ukraine’s power and heating infrastructure have been targeted.

Economic forecasts have steadily worsened in December. Mid-year
forecasts for an economic contraction of 30-35% have been increased
following the disabling of the power sector, with some economists
forecasting a 50% contraction and another 10% next year, depending
on the development of the war.

However, the official forecasts are slightly less apocalyptic: Ukraine's
GDP will grow by 1% in 2023, according to the IMF’s latest macro
forecast. “Economic activity is expected to stabilise in 2023, with
economic growth of 1% under the baseline scenario after the economy
contracted by 33% this year," IMF mission chief Gavin Gray said. In
addition, the Fund predicts that the annual inflation rate in Ukraine will
remain at an average of 25% next year.

In its forecast in September, the EBRD also thought Ukraine’s economy
would shrink by 30% this year but would grow by 8% next year; but that
was before the Russians started bombing the power plants.

The Bloomberg consensus says Ukraine will have -34% growth in 2022,
which makes sense given the Q2 GDP collapse. It also says 2023
growth will be +5%. For that you need +33% Q4/Q4 2023 growth, i.e.
immediate end to war and then a big boom to overcome a huge
negative base effect.

4 UKRAINE OUTLOOK 2022 www.intellinews.com