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lowered its deficit estimate (without grants) from 20.4% to 20.2% of GDP. The forecast for the total national debt at the end of the year has been improved to 94% of GDP from 96.7%. The new forecast for the current account deficit in 2024 is 5.7% of GDP instead of the 7.1% quoted in December materials, and foreign direct investment is 2.2% of GDP instead of 1.2%. The estimate of gross international reserves at the end of this year has improved to $42.1B from $40.9B.
IMF: Due to the intensification of the war, the shock to Ukraine's economy will begin in the second quarter. According to the IMF, in a negative scenario, the war will end by the end of 2025 and not at the end of 2024 as in the base scenario. At the same time, "the shock will begin in the second quarter of 2024" due to the intensification of the war. "This would lead to a sharp decline in real GDP of 4% in 2024 (compared to 3-4% growth in the baseline scenario) and zero growth in 2025," the document says. In the pessimistic scenario, an escalation of the war would affect household sentiment and the pace of migrant returns and result in further damage to infrastructure from Russian strikes. The updated aggregate financing deficit in the pessimistic scenario is estimated at $140.6B, about $19B more than the baseline projection for 2023-2027 ($121.8B), requiring additional steps to ensure debt sustainability. The IMF’s basic scenario has not changed significantly and predicts lower inflation.
The government has named five key sectors of Ukraine as future EU members. Prime Minister of Ukraine Denys Shmyhal singles out five sectors - defense, energy, agriculture, raw materials, and digital - in which Ukraine hopes to declare itself a future member of the EU. "Ukraine is a center of military and defense technologies; we have the potential to be a European shield, a European arsenal, and to strengthen the EU's defense capabilities," he said. Shmyhal suggested that Ukraine can become an energy hub and "bring stability and more opportunities, both economic and energy-related. We have a surplus in our energy system, and we can supply green energy to the European market," Shmyhal said, reminding observers of Ukrainian gas storage facilities, which European companies are actively using. The head of the government emphasized that Ukraine can also "bring more stability to the global food market, and with us, the EU can become a strong geopolitical player regarding food stability. That is why we ask the EC to start a negotiation process with the agricultural (sector) to speed up the coordination of rules and regulations," Shmyhal said.
32 UKRAINE Country Report April 2024 www.intellinews.com