Page 6 - UKRRptFeb23

companies relocate their operations or explore new business models. That has fostered an extraordinary amount of economic adaptability and creativity that is setting the groundwork for post-war reconstruction.
Work has already started to prepare for a post-war recovery, but nothing concrete can be done until the situation on the battlefield is resolved.
With relations between Moscow and Brussels continuing to deteriorate the two sides are further away from each other than ever and all business activity has either gone into survival mode or suspended.
But the morale of the population is high and its determination to overcome Russia as resolute as ever. Support for Ukraine's accession to NATO has reached a historic high. In a referendum, 86% of Ukrainians would support this initiative, 3% would be opposed, and 8% would not vote, according to a study from the Rating group. In addition, 87% of
respondents would support Ukraine's accession to the EU in the event of a referendum, with 3% against and 8% that would not vote. According to sociologists, support for joining the EU and NATO is almost unanimous among representatives from all macro-regions, age, and property groups.
The economic outlook for this year is poor. The West has already agreed to backstop the estimated $38bn budget deficit in 2023 so the government can function. The National Bank of Ukraine (NBU) forecast for growth is only 0.3% in January as the economy remains on life support, but the regular upgraded its forecast for international reserves to $27bn this year and more international aid is expected to be committed over the year.
Fitch Ratings forecasts the growth of Ukraine's economy in 2023 at 2% in 2023, as the war prevents the return of large numbers of refugees or large-scale investment, and power outages create an additional deterrent.
Inflation is forecast to ease to 21% in 2023 from 26.6% in 2022, as the loss of manufacturing capacity, power shortages, and gradual elimination of supply chain disruptions offset weak domestic demand.
At the same time, Fitch believes that the budget deficit will decrease to 15.2% of GDP in 2023 from 20.1% in 2022. Fitch also forecasts a rise in total public debt to 84% of GDP by the end of 2023 as a significant part of the money sent to Ukraine is in the form of loans not grants.
The agency expects that the goal of attracting $38bn in external budget financing in 2023 will be fully achieved. And international reserves at the end of 2023 will be 3.8 months of current foreign receipts compared to 4.0 at the end of 2022.
As of September 2022, the total amount of direct documented damage to residential and commercial real estate as well as other infrastructure amounted to more than $127bn. According to the assessment carried out by the Kyiv School of Economics, the largest share in the total volume of damages belongs to residential buildings ($50.5bn) and infrastructure ($35.3bn). However, estimates for the cost of rebuilding Ukraine is already well over $500bn and could rise as high as $1 trillion – some ten-times the value of the entire economy.
6 UKRAINE Country Report February 2023 www.intellinews.com