Page 12 - Ukraine OUTLOOK 2024

of 2023. While a slowdown from second-quarter growth of 19.5%, GDP growth in the January-September period was still 5.5% y/y, reports the Bank of Finland institute for Emerging Economies (BOFIT) in its weekly update. The IMF estimates that Ukraine’s GDP grew by 4.5% in 2023 and should increase by 3-4% in 2024.
Ukraine’s outlook for 2024 remains up in the air and will depend heavily on both the events in the conflict and the amount of international support the country receives. But Ukraine showed remarkable resilience in 2023, thanks to exceptional harvests, government stimulus commitment to ensure macro-financial stability.
According to a three-year government forecast of Ukraine's economic and social development issued in December:
· Growth in 2023 is expected to be 5% y/y. In 2024 GDP will climb by 4.6%; in 2025 the growth rate will accelerate to 6.8%, and in 2026 it will slow to 6.6%;
· The growth of consumer prices (inflation) is expected to be at the level of 9.7% in 2024, 8.1% in 2025 and 6.9% in 2026, according to the main forecast of macro indicators that was approved by the Cabinet of Ministers of economic and social development of Ukraine for 2024-2026;
· The average gross monthly salary of employees (before taxes) will be UAH21,809 ($596) in 2024, UAH25,732 ($703) in 2025 and in 2026 it will be UAH30,260 ($826);
· Legislation establishing the State Budget for 2024 increases the minimum wage from UAH6,700 in 2023 to, starting January 1, UAH7,100 ($194), and from April 1 to UAH8,000 ($219);
Ukraine's economy is recovering faster than forecast, but the outlook remains very uncertain. Under the assumption that conditions are in place for reconstruction efforts to start from the beginning of 2025, real GDP growth is projected to remain moderate in 2024, at 3.7%, before significantly picking up to 6.1% in 2025. Nevertheless, real GDP is set to remain roughly 20% below pre-war levels at the end of the forecast horizon, according to the EU.
The rate of recovery of the Ukrainian economy in 2023 exceeded initial forecasts, and the locomotive of positive change was the ability of Ukrainian businesses to adapt to the challenging conditions of a full-scale war, the NBU explained in a review.
Ukraine has had good luck with the weather too, which led to exceptionally high grain yields in 2023. Although the grain corridor shutdown has limited exports, expanding alternative routes, mainly through the Danube ports, has allowed exports to resume to a limited degree.
And rising private consumption also drove growth as life in many parts of the country away from the front line returned to some semblance of normality. Private consumption will likely become the main growth driver, especially in the short term, as consumers continue to adapt to the war environment and a decrease in inflation provides some support to real incomes, says Dragon Capital.
Economic growth forecasts
The war poses a significant risk to economic prospects, an IMF Forecast says. However, there was a raft of upgrades to the expected growth rate in
12 UKRAINE OUTLOOK 2024 www.intellinews.com