3 Aug 2023 13:53

Analysts expect Ukraine's GDP to grow 4.7% in 2023, 5.1% in 2024

MOSCOW. Aug 3 (Interfax) - Ukrainian analysts have significantly improved their 2023 GDP outlook: they now expect it the economy to grow 4.7%, while in March the consensus was close to zero, said Maria Repko, Deputy Director of the Center for Economic Strategy (CES).

"I was very pleased to see that the economic forecasts are very much improved compared to what was predicted in March," Ukrainian media quoted Repko as saying while presenting the results of the CES survey at a discussion titled "The New Macroeconomic Forecast for Ukraine : Unraveling the Exchange Rate, GDP and Inflation."

Respondents included Alexandra Betly, leading research fellow at the Institute for Economic Research and Policy Consulting (IER); Elena Bilan, Director of the Analytical Department at Dragon Capital; Alexei Blinov, head of the Analytical Department at Sense Bank; Vitaly Vavrishchuk, head of the Macroeconomic Research Department at ICU Group; Evgeniya Sleptsova, Senior Economist at Oxford Economics; and Alexander Parashchy, head of the Analytical Department at Concorde Capital.

Repko said forecasts for GDP growth this year ranged from 4.5% to 8%, and its nominal value from $161 billion to $181 billion.

The analysts polled expect GDP to increase by another 5.1% next year.

Betly, commenting on the IER forecast of 4.1% GDP growth in 2023, said the closure of the grain corridor has become a constraining factor. "This is a risk for the metals and iron ore industries, because they miss out on an opportunity for easier access to railways and exports," she said.

As for inflation, the independent analysts assume this will rise slightly next year to 12% after slowing to 10.6% this year from 26.6% last year.

Betly said this estimate was underpinned by hopes that the government will relax regulated tariffs next year, allowing them to gradually approach market levels, and will begin to resolve the problem of the accrual of quasi-fiscal debts by state-owned companies like Naftogaz and Energoatom.

"If in March the majority of economists believed that the exchange rate would cross UAH40/$1 threshold this year, then no one thinks so now. And they believe that the fixed rate will remain at this level until the end of 2023," another respondent of Repko's survey said.

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%, and improved its 2024 outlook to 8.5%.

The Economy Ministry in June revised its GDP growth forecast for this year down slightly from 3.2% to 2.8%, and said it was expecting inflation of 14.7%.The ministry predicts GDP growth will accelerate to 5% next year, while inflation slows to 10.8%.

The International Monetary Fund in June improved its forecast for Ukrainian economic growth this year to 1-3% with inflation of 15.5%, while next year it expects GDP growth of 3.2% with inflation of 10%.