7 Jun 2023 15:06

World Bank downgrades forecast for growth in Ukraine's GDP to 2% for 2023

MOSCOW. June 7 (Interfax) - The World Bank has downgraded its forecast for growth in Ukraine's GDP to 2% for 2023 from its outlook of 3.3% in January, the bank said in its June Global Economic Prospects report.

According to the bank's report, "The outlook is marked by pronounced uncertainty."

The World Bank has explained the downgraded forecast as mainly owing to the economic shocks resulting from the destruction of energy infrastructure in the fourth quarter of 2022.

Ukraine's public finances will remain under pressure despite external support, including the recently agreed $15.6 billion in financing from the International Monetary Fund (IMF) as per the arrangement under the Extended Fund Facility (EFF).

The World Bank has recalled that the costs for reconstruction and restoration are estimated at 2.6-fold higher that the level of GDP in 2022.

Following the IMF, the World Bank has refrained from forecasting the Ukrainian economy for the upcoming years.

Meantime, in an updated economic review of the region published in early April, the World Bank had forecast Ukraine's GDP to grow 0.5% in 2023, 3.5% in 2024, and 6.5% in 2025, after contracting severely by 29.2% in 2022.

As reported, following the results of its mission, the IMF at the end of May upgraded its forecast for growth in Ukraine's GDP to 1%-3% from minus 3% to plus 1% at the end of March.

The IMF also once again in its April World Economic Outlook refrained from forecasting the Ukrainian economy beyond 2023 "owing to an unusually high degree of uncertainty", although the IMF had provided estimates for up to 2027 in the EFF approved at the end of March. According to the April outlook, the country's GDP was forecast to contract 3% this year. The outlook in the 2023 baseline scenario is minus 3% to plus 1%, according to the EFF.

The National Bank of Ukraine at the end of April upgraded its GDP forecast to growth of 2% for 2023 from growth of 0.3% that the NBU had forecast in January. The NBU has upgraded its GDP outlook to growth of 4.3% for 2024 from 4.1%, and has retained its forecast for GDP to rise 6.4% in 2025.