Page 5 - UKRRptOct23

1.0 Executive summary
Ukraine’s economy put in its first positive growth since the war began 19 months ago expanding by 19.5% in the second quarter of this year compared to the same period last year, according to Ukrstat's report on September 22.
This recovery is attributed to low base effects, as Ukraine's economy had suffered a severe contraction following Russia's invasion in February 2022.
The peak of the economic downturn occurred in the second quarter of last year, with a contraction of 37.2% y/y, surpassing the negative growth of -17% recorded during the second quarter of 2015, following the Euromaidan revolution.
When accounting for seasonal factors and putting aside the low base effects, the GDP for the second quarter of 2023 experienced an increase of 0.8% compared to the previous quarter. Over the past year, Ukraine's GDP faced significant challenges, resulting in an overall contraction of 29.1%, as reported by the State Statistics Service.
The near-term outlook is for more modest growth. The National Bank of Ukraine (NBU) adjusted its GDP growth forecast for the nation in 2023, raising it from 2% to a more optimistic 2.9%. However, the growth forecast for 2024 was slightly revised downward from 4.3% to 3.5%. The NBU anticipates second-quarter growth in 2023 of 18.1%.
The Ministry of Economy in Ukraine remains optimistic about the country's economic prospects, forecasting a GDP growth rate of 4% for 2023 and a further acceleration to 5% in the following year. This optimism is based on expectations of economic stabilization and containment of the conflict in the east and south of Ukraine.
The EU's embargo on Ukrainian grain imports came to an end on September 15, but Poland, Slovakia, and Hungary extended this embargo unilaterally due to the oversupply of cheap low-quality Ukrainian grain that caused the local grain prices to collapse.
Ukraine has made progress in gaining support from its five neighbouring EU countries for a joint verification and approval mechanism for grain supplies that was the compromise to restart grain shipments through Central Europe. Romania and Slovakia have embraced this grain trade system, lifting their bans.
The Rada also put through Ukraine’s 2024 budget with a significant boost to military spending that will now account for 20% of GDP. However, half of all the funding for the budget will come from donors.
Nevertheless, the government is optimistic thank to the improving macroeconomic situation, such as lower-than-expected inflation and a stronger hryvnia than were assumed in the 2023 state budget. Consumer inflation returned to a single-digit level for the first time in over two years, standing at 8.6%, largely due to a significant drop in vegetable prices.
5 UKRAINE Country Report October 2023 www.intellinews.com