Ukrainian economy shrank 45% in March, budget deficit could reach 26% of GDP in 2022 - Dragon Capital

KYIV. April 19 (Interfax-Ukraine) - Ukraine's real GDP shrank 45% year-on-year in March and the state budget deficit could reach 16-26% of GDP in 2022, the Dragon Capital investment company said.

"According to preliminary estimates, in March, real GDP fell by 45% year-on-year," the company said in a report.

Ukraine will be able to export less than half of previous volumes without the resumption of access to the Black Sea, it said.

The investment company predicts that a sustainable ceasefire in the coming months will accelerate economic recovery and reduce the annual decline in GDP to minus 25% year-over-year, followed by 6.5% growth in 2023.

According to the analysts, one of the biggest challenges is the implementation of the state budget, which is complicated by a drop in tax revenues and an unprecedented expansion of the budget deficit.

Dragon Capital estimates an average monthly budget deficit at $4 billion during hostilities and allows for the gap to narrow to $2.5-3 billion "if a sustainable ceasefire agreement is reached."