S&P forecasts Ukraine's GDP growth will slow to 3.9% in 2024

MOSCOW. March 11 (Interfax) - Ukraine's economy will continue to grow in 2024 due to expanding domestic demand and a further recovery in seaborne exports, but growth will slow to 3.9% from around 5.5% in 2023 due to the high base effect created by the past strong agricultural season, Ukrainian media reported, quoting international rating agency S&P Global Ratings.

Earlier on Monday it was reported that S&P had downgraded Ukraine's long-term foreign currency rating from "CCC" to "CC" with "negative" outlook.

The agency said Ukraine's economy might grow about 4%-5% per year in the medium term, but that recovery to the levels seen in 2021 and earlier years is "unlikely in the foreseeable future."

S&P estimates average annual inflation will slow to around 7% this year from 12.8% last year, but will accelerate in the second half of the year as the base effect weakens, domestic demand recovers and the national currency falls moderately.

The agency expects that the hryvnia exchange will weaken to UAH 41.02/$1as of the end of 2024 and to UAH 43.89/$1 at the end of 2025.

S&P said that in general, Ukraine's medium-term economic prospects are subject to a high degree of uncertainty, and the key factors influencing the country's outlook include demographics, labor market profile, the effectiveness of economic recovery and international support.

Official 2023 GDP data for Ukraine have not yet been published.

The National Bank of Ukraine in January estimated the economy had grown 5.7% in 2023 and maintained its forecast for GDP growth this year at 3.6%, worsening the 2025 outlook from 6% to 5.8%.

The government improved its GDP growth estimate for 2023 from 2.8% to 5% when approving the draft state budget for its second reading but worsened the 2024 growth outlook from 5% to 4.6%.