Ukraine's economic growth will continue in 2024 thanks to expanding domestic demand and a further recovery in maritime exports, but it will decline to 3.9% from about 5.5% last year due to the high base effect created by a strong agricultural season, predicts international rating agency S&P Global Ratings. Interfax-Ukraine writes about this.
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“In the absence of significant escalation of the war, we project that Ukraine’s economy will grow by an average of approximately 4-5% in the medium term, but recovery to pre-war levels is unlikely in the foreseeable future,” the release notes.
According to estimates S&P, average annual inflation will fall to about 7% from 12.8% last year, but it will strengthen in the second half of this year amid a weakening base effect, a recovery in domestic demand and a moderate depreciation of the currency.
The agency expects that the hryvnia exchange rate will drop to 41.02 UAH/$1 by the end of this year, and to 43.89/$1 by the end of next year.
S&P notes that developments in the war with Russia continue to shape Ukraine's macroeconomic outlook. “It is unclear how the war might develop, but we believe that a military stalemate without any major changes on the front line remains the most likely scenario as both sides accept a protracted war. The prospects for any negotiated peace plan seem unlikely. As a result, we expect that the active phase of the war will continue until the end of this year, and most likely beyond,” the document says.
The agency reminds that Russian troops occupied about 15% of Ukraine's territory, which accounts for about 8-9% of its pre-war GDP, 14% of industrial and 10% of agricultural production. Almost a third of Ukraine's population has been displaced, and about 15% have fled the country and are now refugees living primarily in the EU.
However, according to S&P's base case scenario, the Ukrainian government and NBU will retain their administrative capacity even in the face of a serious military attacks.
