Ukrainian MinFin lowers 2024 GDP growth outlook to 3.5% due to energy problems

LUXEMBOURG. May 27 (Interfax) - The forecast for real GDP growth in Ukraine in 2024 has been adjusted to 3.5% from 4.6% due to energy infrastructure disruptions and electricity shortages, Ukrainian media reported, quoting Deputy Ukrainian Finance Minister Olga Zykova.

"We've had to revise GDP growth for this year. And it's important for investors, for the audience to understand that the previous GDP growth outlook of 4.6% has been revised to 3.5%," she said at the Luxembourg-Ukraine Business Forum's "Rapid Recovery of Ukraine," held in Luxembourg.

Zykova said important factors influencing the fiscal and macroeconomic situation in the country, in addition to the situation in the energy sector, were also the volume and frequency of external funding to cover social expenses and military aid. Problems earlier this year meant that due to supply shortages at the beginning of the year, Ukraine had to spend an additional $5 billion on military needs, which resulted in a bigger budget deficit and the need to introduce a fairly complex list of domestic fiscal measures that could also affect economic growth rates, Zykova said.

In light of this, she underlined the importance of coordination between Ukraine and donors and the readiness of the latter to make flexible and prompt decisions.

She also mentioned the importance to Ukraine of structural reforms, which, according to the Ukrainian authorities, will ultimately help Kiev on the path to European integration. In this regard, the Ukraine Facility instrument and the Ukrainian plan approved for it will have a positive impact, she said.

The National Bank of Ukraine on April 25 lowered its forecast for the country's GDP growth in 2024 to 3%, from the 3.6% it was expecting in January. Ukraine's GDP grew 5.3% in 2023.

The Ukrainian government forecast 4.6% GDP growth for 2023 when approving the draft state budget for its second reading. According to the Economy Ministry's preliminary estimates, year-on-year GDP growth slowed to 4.3% in April from 4.6% in March and to 4.4% in the first four months of the year from 4.5% in the first three months.