National Bank of Ukraine improves 2023 GDP growth estimate to 5.7%, still forecasting 3.6% growth in 2024

MOSCOW. Jan 25 (Interfax) - The National Bank of Ukraine has improved its estimate of real GDP growth in 2023 from the 4.9% it gave in its October macroeconomic forecast to 5.7%, Ukrainian media reported, quoting an NBU press release on Thursday.

The NBU is still expecting 3.6% growth in 2024 but has lowered the 2025 growth forecast 0.2 percentage points to 5.8%.

Real GDP growth exceeded expectations in Q4 2023, primarily due to better harvests of late crops and the development of alternative export routes. This also created grounds for an improvement in estimates of real GDP growth for the whole of 2023, to 5.7%.

As inflation was lower than expected, the nominal GDP estimate for 2023 was lowered to UAH 6.51 trillion from UAH 6.625 trillion, the 2024 estimate to UAH 7.58 trillion from UAH 7.73 trillion and 2025 to UAH 8.71 trillion from UAH 8.9 trillion.

The economy returned to growth in 2023, and the recovery will continue in the coming years.

"In 2024, real GDP will rise by 3.6%, mainly thanks to budget expenditures remaining high in view of expected sufficient inflows of international financial assistance. However, the pace of economic growth will be lower than last year due to an expected decrease in harvests and greater labor market mismatches," the NBU said.

Economic growth will accelerate to 4%-6% per year in 2025-2026, thanks to a decline in security risks, improvement in consumer and investment sentiments, and the implementation of European integration, it said.

Loose fiscal policy will continue to support the economy, but the budget deficit will narrow significantly as the internal resource base increases.