Page 26 - UKRRptAug22

3.2 Macro outlook
The NBU predicts a 2022 drop in GDP by a third and an increase in inflation to more than 30%. The national bank estimates that the economy will decline by 40% in the first half of this year and at the end of the year down by a third, the National Bank of Ukraine reported. At the same time, analysts of the regulator believe that the economy of Ukraine will show a recovery of 5-6% in 2023-2024. This will become possible if the active phase of the war ends and the Black Sea ports are unblocked. The national bank also worsened the inflation forecast for 2022 to more than 30%. However, the regulator expects it to return to the goal of 5% in 2025. According to the NBU forecast, inflation will decrease to 20.7% in 2023 and 9.4% in 2024. As the market expected, the NBU kept the discount rate at 25% per annum and plans to keep it at this level until the second quarter of 2024.
Fitch gives a negative forecast for Ukraine's GDP, inflation, and budget deficit. The international Fitch Ratings agency predicts Ukraine's state budget deficit in 2022 will be at 29.1% of GDP, which is a record-high indicator. The growth of consumer prices in Ukraine will accelerate to 30%, and the economy will shrink by 33%, the agency said. The agency further predicts that the state budget deficit will remain significant even in 2023 - at 22.4% of GDP due to the constant need to finance the war and replace critical infrastructure. Fitch's inflation expectations for 2023 are also negative - it will be high, on average, at 20% due to the devaluation of the hryvnia. As for the economy, a slight 4% recovery is expected in 2023. In addition, Fitch lowered the long-term default rating of the Ukrainian issuer from CCC to C (pre-default). However, the
26 UKRAINE Country Report XXXX 2018 www.intellinews.com