Page 6 - UKRRptDec23

1.0 Executive summary
Economically, Ukraine has had a good year in 2023. Top investment bank Concorde Capital has forecasted that Ukraine's GDP will grow by approximately 6% in 2023 after a heavy contraction in 2022.
However, the outlook for 2024 is more modest, with economic growth not expected to exceed 3% per year as the poor progress in the war and shrinking levels of international support weigh on the economy. Ihor Mazepa, the CEO of Concorde Capital, emphasised that external support from Western partners has been crucial in preventing Ukraine from returning to the economic hardships of the 1990s, but in November the government was already working on a plan B should the West fail to come up with the $43bn the government needs to keep the lights on.
Ukraine’s war funding is in increasing doubt after Congress failed several times to pass a spending bill that includes $61bn of funds for Ukraine. An EU package of €50bn is also facing difficulties as several Central European countries are both tired of funding Ukraine and of the economic damage sanctions are doing to their own economies.
Ukrainian President Volodymyr Zelenskiy is adamant that Ukraine will not enter into peace talks with Russia, but it may be forced on Kyiv at some point in 2024 due to falling support. Plan B is a phased action starting with spending cuts and finishing with turning on the printing presses to fund the war if resources get too low.
However, in the short-term the government is funded for the rest of this year and into the first quarter. Consumer demand is currently driving economic growth but nevertheless Ukraine faces a raft of huge challenges, including the loss of industrial capacity and human capital after about 8mn Ukrainians fled the country.
Slower GDP Growth in October, but Positive Signs in Industry In October 2023, Ukraine's real GDP growth slowed to 6.5%, down from 11.1% in September. This deceleration was attributed to a lower contribution from agriculture due to the higher statistical base in October of the previous year. The Institute for Economic Research (IER) noted that real GDP in October 2023 was 28% lower than in October 2021.
However, there were positive indicators in the industrial sector, where real gross value added (GVA) grew by 16%. This growth was driven by improvements in metallurgy and mechanical engineering. The business community remains optimistic and intends to increase production, as indicated by survey results. Nevertheless, October's exports, particularly road transport, were limited by Poland's policy, and a truckers' strike that began on November 6 has added to the challenges.
Additionally, the trade deficit reached a new historical high in October, while inflation decreased to 5.1%.
The International Monetary Fund (IMF) recently upgraded its forecast for Ukraine's economic growth in 2023. Initially predicting a range of 1-3% in July,
6 UKRAINE Country Report December 2023 www.intellinews.com