Page 36 - UKRRptFeb24

(5.1%) reached its lowest level in three years
ICU analysts explain what exactly ensured the growth of Ukraine's economy by 5% last year. Ukrainian GDP growth of almost 5% resulted from stabilization following the previous year’s drop of 29.1%, ICU group analyst Vitaly Vavryshchuk said. "Additional investments or infrastructure projects play a role in this recovery," the expert explained. He named the following reasons for stabilization:
● Defined and regular international financial assistance – at the beginning of 2023, it was unclear whether there would be any. The government received all the volumes it had planned.
● From February 2023, blackouts stopped - businesses operated with a stable electricity supply.
● The Ukrainian maritime grain corridor without Russia works better than the previous "grain initiative," giving greater business security.
● The front line did not move - Ukraine did not achieve much in its counteroffensive, but Russia did not advance either.
● All these factors combined to give consumers a greater sense of security, and they began to consume more, save less, and buy more. Enterprises accordingly increased their capacity.
Ukraine's gross domestic product (GDP) in 2023 increased by 5% after falling by 28.8% in 2022, this preliminary assessment of the Ministry of Economy was announced by First Deputy Prime Minister - Minister of Economy Yulia Svyrydenko at a webinar of the Center for Economic Strategy on Jan 11. “This is the so-called recovery growth,” she said, adding that the National Bank estimates GDP growth last year at 5.5%.
Svyrydenko clarified that the highest rates of recovery were demonstrated by public administration and defence due to priority funding, construction taking into account restoration projects, agriculture due to good weather and high harvests, domestic trade and processing industry.
The NBU has summarized the war’s consequences for the Ukrainian economy. The full-scale invasion by the Russian Federation has caused a 30% loss of Ukraine's GDP. Also, the forced exodus of Ukrainians in 2022 caused an increase in inflation, said the head of the National Bank, Andriy Pishnyi. "Ukraine's critical dependence on international financial aid remains, and the importance of this source should not be underestimated. It is fundamentally important for us. After all, due to a full-scale invasion, the country lost a third of its GDP and 20% of its territory, and the migration flow became the largest since the Second World War. This is a huge global catastrophe from which Ukraine continues to suffer," the head of the NBU said. Pyshnyi explained that inflation in 2022 and high inflation at the beginning of 2023 resulted from Ukraine printing ₴400B to finance the war budget. “In 2022, we received an unprecedented $32B in financial aid, but it was provided at the end of the year," noted the head of NBU. However, in 2023, the NBU did not print hryvnias to finance the budget deficit.
Analysts believe that the Ukrainian economy performed surprisingly well in 2023. As noted in the Atlantic Council, in the fall of 2022, Ukraine was forced to print money, and in December 2022, inflation rose to 27%. However, the budget deficit was offset by $40B of international aid. As a result, inflation
36 UKRAINE Country Report February 2024 www.intellinews.com