Economy Ministry says Ukraine's GDP could grow up to 5% in 2023, but so far maintaining conservatively forecast of 2.8%

MOSCOW. Aug 2 (Interfax) - Ukraine's GDP could grow up to 5% in real terms in 2o23 but given the existing risks, the Economy Ministry is maintaining a conservative growth forecast of 2.8% for now, said Natalya Gorshkova, head of the ministry's Strategic Planning and Macroeconomic Forecasting Department.

"In the working estimates that we have, we, like most experts, see an opportunity this year to achieve real growth of about 5%," Ukrainian media quoted her as saying at a discussion titled "The New Macroeconomic Forecast for Ukraine: Unraveling the Exchange Rate, GDP and Inflation," organized by Centre for Economic Strategy (CES).

But Gorshkova said the ministry did not intend to change the current forecast of 2.8%, since fairly significant risks remained.

"We are part of the budget process, and we would not like to revise the basis for budgeting every time, like a swing," she said.

She said the ministry earlier forecast that the Ukrainian economy would grow 3.2%, but in June, due to the Kakhovka hydroelectric power plan disaster rand downbeat expectations about the future harvest, it was adjusted to 2.8%. "We might have been a little hasty," Gorshkova said.

As for longer-term forecasts, she said that like most experts, the ministry hoped the crisis would end in 2024, which would kick start the economy's speedy recovery.

"So according to our current forecasts, we expect 5% growth next year," Gorshkova said.

She said investment would be the main growth driver, while the nature of the investment would change: military investment will be replaced by investment in infrastructure projects, in projects related to reconstruction, supported by foreign investment and the return of migrants from abroad.

Regarding inflation, which the Economy Ministry expects will be 14.7% this year, Gorshkova said the ministry's forecast also remained conservative, as it was still assumed the hryvnia's official exchange rate might be revised at the end of the year.

The National Bank of Ukraine last week improved its forecast for the country's GDP growth in 2023 to 2.9% from 2%, but worsened the 2024 growth outlook to 3.5% from 4.3%. The NBU also improved its forecast for the country's inflation in 2023 to 10.6% from 14.8%.