Ukraine's GDP will grow by 1% in 2023 due to improvement in the energy sector - IMF
Inflation will decrease from 26.6% last year to 20% this year
The International Monetary Fund (IMF), which previously estimated the dynamics of the Ukrainian economy this year from 3% decline to 1% growth, is inclined to believe that GDP growth in 2023 may be at the upper end of this range.
Source. This was reported by Interfax-Ukraine.
As noted in the Fund's materials, published on Saturday night, this is due to newly available data that the decline in Ukraine's real GDP in 2022 was slightly less than estimated – 29.2% versus -30.3% due to a more stable fourth quarter – 31.4% decline instead of the previous estimate of 35%.
"This reflects the less severe than expected impact on economic activity of power outages across the country from attacks on critical energy infrastructure, as well as higher repair costs," the IMF explained.
Taking into account a stronger fourth quarter of 2022, all other things being equal, will help boost growth in 2023 by reducing the negative carryover effect.
As reported, the IMF forecasts growth to accelerate to 3.2% in 2024 and to 6.5% in 2025.
In nominal terms, the Fund estimated that Ukraine's GDP fell to UAH 4.9 trillion last year from UAH 5.46 trillion in 2021 and expected it to grow to UAH 6.05 trillion in 2023 and UAH 7.365 trillion in 2024.
According to his forecasts, inflation will decline from 26.6% last year to 20% this year, 12.5% in 2024 and 8% in 2025, reaching the target level of 5% set by the National Bank in 2027.
It is also expected that real wages, after falling by 21.1% last year, will decrease by another 2% this year, increase by 2.5% next year, and then grow by 5%.
At the same time, the unemployment rate will decline from 24.5% to 20.9% this year, to 11.9% next year, and to 9.7% in 2025.
The Ukrainian government also forecasts a 1% GDP growth this year. In January, the National Bank lowered its estimate to 0.3%, but recently announced a high probability of another upward revision, in particular by 1 percentage point due to a better-than-expected energy supply situation.
Background. At the same time, it was reported that the IMF forecasts risks for the global economy in 2023.
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