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industry in machine building and the food industry, which, considering last year's low base, kept the sector's growth at approximately the 20% level. At the same time, the growth value added by the processing industry remained significantly lower than the pre-war level of 2021, the IER added.
The NBU improves its GDP forecast for this year but lowered it for 2024.
The national bank expects the Ukrainian economy to grow by 2.9% this year compared to the previous forecast of 2%. The further recovery of Ukraine's economic activity will be facilitated by the growth of domestic demand within the stably functioning energy system and continued macro-financial stability. However, GDP growth was limited by constant missile attacks, sabotage of the grain corridor's operation, and new destruction of infrastructure facilities. In addition, business was negatively affected by trade restrictions for Ukrainian agricultural products from several EU countries. These factors led to the reduction of Ukrainian exports in the second quarter and will hold back the economy's recovery in the future. At the same time, the NBU indicates that the actual results of the first quarter were better than the previous macro forecast. The revival of the economy continued in the second quarter, both in the production sector and in the service sector.
3.2 Macro outlook
The EU predicts Ukraine's GDP will grow this year. The Spring 2023 Economic Forecast states that Ukraine's economy will stabilise this year, and GDP may grow by 0.6%. And after a year, growth may reach 4%. This growth is forecast even though during the first year of the war, Ukraine's economy dropped by 29.1%. According to the analysis, exports of goods and services, after falling by 42.4% last year, should grow by 1.5% this year and by 5.3% in 2024. After a reduction of 18.5%, imports should increase by 3-6.2% in the next two years. Ukraine's trade balance deficit (for goods only) should be
21 UKRAINE Country Report August 2023 www.intellinews.com