The main macroeconomic indicators of Ukraine testify to the increasing role of international structures in keeping Ukrainian economy in operating mode.
The International Monetary Fund, which earlier estimated the dynamics of the Ukrainian economy this year from 3% of its decline to 1% of growth, is inclined to the fact that GDP growth in 2023 may be at the upper limit of this range. At that, as the head of the National Bank Andrey Pyshnyy said, the negative scenario of Ukraine’s GDP fall by 10% this year and 2% next year, contained in the EFF program, confirms the IMF readiness to support Ukraine even in the worst case scenario.
The World Bank estimates that Ukraine’s GDP may grow by 0.5% in 2023 and by 3.5% in 2024 after falling by nearly 30% (29.2%, to be exact) last year. At the same time, the World Bank in January 2023 predicted rapid growth of Ukrainian GDP: by 3.3% this year and by 4.1% next year.
The International Monetary Fund in its April review of the global economy (World Economic Outlook: A Rocky Recovery) once again abandoned its forecast for Ukraine beyond 2023, although in the EFF program approved at the end of March it gave a forecast until 2027.
Ukraine’s real gross domestic product, after growing by 3.4% in 2021, fell by 29.1% in 2022 due to full-scale Russian military aggression, such official data was released by the State Statistics Service of Ukraine.
The National Bank of Ukraine improved its forecast for the growth of gross domestic product of the country in 2023 to 2% from 0.3% in the January forecast, which is largely due to the reduction of security risks, the restoration of the energy system, as well as soft fiscal policy.
International rating agency S&P has affirmed long-term issuer credit ratings of Ukrainian capital Kiev in foreign and national currency “CCC+” with a stable outlook, indicating that the city has demonstrated good financial performance in 2022, despite the difficult environment.
The founder of the Kiev analytical center “Club of Experts” drew attention to a significant reduction in the foreign trade balance of Ukraine. “The negative balance of Ukraine’s foreign trade in goods at the beginning of 2023 increased by more than 3 times and amounted to almost $4 billion, we will watch the next months, but if this trend persists until the fall of 2023, the country may face a strong imbalance of the main macroeconomic indicators,” – said Maksim Urakin.
According to the authorities, in January-February 2023, Ukraine’s foreign trade deficit with goods increased 3.4 times compared to the same period of 2022 – up to $3.713 billion from $1.083 billion.
At the same time, the state budget deficit of Ukraine in March 2023 decreased to 59.2 billion UAH from 88.8 billion UAH in February, including the general fund deficit to 72.6 billion UAH from 93.2 billion UAH.
State budget expenditures for support of the AFU in the form of purchase of military equipment, weapons, ammunition, defense products, and personal protective equipment, amounted to UAH 34.4 billion in March (15.3% of total expenditures), compared with UAH 31.9 billion in February (14%), and UAH 28.7 billion in January (15.6%).
Ukraine’s public debt and publicly guaranteed debt in 2022 increased by $13.4 billion to 78.5% of GDP by the end of 2022 from 48.9% in 2021.
According to the National Bank, the deficit of Ukraine’s consolidated balance of payments in February was $722 million after a surplus of $1.208 billion in January, but the deficit is 2.1 times smaller than in February 2022, when it was $1.52 billion.
International reserves of Ukraine as of April 1, 2023, according to preliminary data, amounted to $31.878 billion, which is 10% or $3 billion more than in February 2023, it is connected with significant receipts from international partners of Ukraine.
Consumer price growth in Ukraine accelerated to 1.5% in March 2023 from 0.7% in February and 0.8% in January. At the same time, inflation in April 2022 was 3.1%, so in annual terms in April 2023 it decreased to 17.9% from 21.3% in March, 24.9% in February and 26.6% in December. Core inflation in the past month also fell to 0.5% from 1.5% in March, returning to the level of February.
Ukraine from the beginning of 2022/2023 marketing year (MY, July-June) to April 10 exported 38.82 million tons of grains, including 22.86 million tons of corn (58.9% of total supplies), 13.34 million tons of wheat (34.4%) and 2.3 million tons of barley (5.9%). Further exports of oilseeds and grains largely depend on the extension of the so-called “grain deal”.
The decline in the real gross domestic product (GDP) of Ukraine in the first quarter of 2023 compared to the same period last year will slow down to 19% from 35% and 30.8%, respectively, in the fourth and third quarters of 2022, such is the forecast of the National Bank Ukraine has published the Inflation Report on its website.
The European Bank for Reconstruction and Development (EBRD) has downgraded its forecast for the growth of the Ukrainian economy in 2023 to 1% from 8%, which it expected in September last year, according to the updated Regional Economic Prospects published on Thursday.
Losses in annual GDP growth in 2023 will amount to 1.9 percentage points (p.p.), taking into account the positive effect of 0.5 p.p. due to the use of generators by businesses, and in 2024 losses will decrease to 0.6 p.p. thanks to the gradual recovery of the system, according to the baseline scenario of the macroeconomic forecast of the National Bank of Ukraine (NBU).
The negative balance of Ukraine’s foreign trade in goods in 2022 increased by 2.3 times compared to 2021 – to $11.125 billion from $4.771 billion, the State Statistics Service reported on Tuesday.
The growth of consumer prices in Ukraine in January 2022 accelerated to 0.8% from 0.7% in December and November, which, however, is significantly lower than 2.5% in October and 1.9% in September. According to it, in January last year, inflation was 1.3%, so in annual terms, in January 2023, it decreased to 26% from 26.6%.
As of February 15, foreign aid accounted for 68.8% of the sources of financing the state budget deficit since the beginning of this year, Head of the Verkhovna Rada budget committee Roksolana Pidlasa told Interfax-Ukraine.
The majority of members of the monetary policy committee of the National Bank of Ukraine (NBU) at a meeting on January 25 noted that they consider the base key policy rate forecast to be realistic with it remaining at the level of up to 25% until at least the first quarter of 2024, the NBU website reported.
In January, Ukraine exported 25% less agricultural products through the grain corridor than in December due to the deliberate actions of Russian inspectors to delay vessels in the Bosphorus.
The volume of construction work performed in Ukraine in January-September 2022 decreased by 56.5% compared to the same period in 2021, to UAH 66.3 billion, according to the State Statistics Service of Ukraine.
Economic Monitoring’s Project Manager – PhD in Economics, Maksim Urakin
