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3.2 Macro outlook
Concorde Capital's forecast for Ukraine's GDP growth is 6% this year and no more than 3% in the future. The Ukrainian economy will grow by about 6% in 2023, and in the future, economic growth will not exceed 3% per year, predictsthe CEO of investment company Concorde Capital, Ihor Mazepa. "We were not returned to the 1990s only because Western partners helped us economically and militarily. But we also did not take off due to a lack of reform and foreign investment because a working mechanism for insurance of military risks has not yet been created," said the businessman. He also noted a significant increase in the public sector instead of privatization and continued pressure on business from the state. Economic growth is now driving consumer demand. In the next two to three years, he expects GDP growth of about 3% under the best-case scenario (primarily with maintained international support). "Firstly, with the war, we have already lost 15% of the industrial and 20% of our human potential, i.e. consumers and labor force. Secondly, capital investments, accelerating labor productivity growth, are scarce during the war," explained Mazepa.
The war will determine Ukraine's economic prospects. Ukraine's economy continues to recover in 2023 amid infrastructure attacks, and its growth could reach 1-3% this year, 3.2% next year, and 6.5% in 2025. However, the duration and intensity of the war pose a significant risk to economic prospects, an IMF forecast says. "Medium-term prospects depend on the outcome of the war, the scale of reconstruction costs, the return of migrants, structural reforms, and prospects for joining the EU," the forecast states. According to the Fund, the current recovery is due to the increased resilience of companies and households during the war, contributing to the recovery of domestic demand and improved consumer and business sentiment. Ukraine's currency market has remained generally stable thanks to international financial support. International reserves exceeded expectations. Year-to-date foreign direct investment inflows of about $2B and a lower-than-expected outflow of foreign currency from the banking system also helped reinforce a solid international reserves position.
43 UKRAINE Country Report December 2023 www.intellinews.com