The National Bank forecasts slower growth of the Ukrainian economy in 2024 than last year and expects real GDP growth to be 3.6%. This is stated in the NBU Inflation Report for January 2024.
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It is noted that thanks to higher-than-expected harvests of late crops, as well as greater adaptability of the population and business to crisis conditions, the National Bank improved its estimate of real GDP growth in 2023 from 4.9% to 5.7%.
At the same time, in 2024, real GDP will continue to grow, but at a slower pace (3.6%).
“The recovery will be supported by an accommodative fiscal policy, a further recovery in domestic demand, as well as an expansion of logistics capacity. At the same time, still high security risks and the scale of losses and destruction will limit economic growth. A likely reduction in harvests after last year’s yield records will also have a restraining effect,” explains the NBU.
The regulator expects real GDP to grow by 5.8% in 2025 and 4.5% in 2026. Reducing security risks will lead to an overall improvement in expectations, optimizing logistics and streamlining production processes. In addition, the expansionary nature of fiscal policy will remain, which will be possible thanks to the still large volumes of international financial assistance.
If in 2024 there is a significant budget deficit ( almost 21% of GDP excluding grants) will be due to high defense spending, then in subsequent years – significant needs for the restoration of infrastructure, production capacity, and social support.
At the same time, expansion of our own resource base and reduced security risks will ensure a reduction in the budget deficit to 13.5% and 7.5% of GDP in 2025-2026, respectively.
In the post-war period, the private sector’s contribution to recovery is expected to significantly increase.
< p>Thanks to European integration reforms, the country’s investment attractiveness will increase, which will stimulate foreign investment. At the same time, rising employment and wages, as well as the return of migrants, will fuel consumer demand.
