The article summarizes and analyzes the main macroeconomic indicators of Ukraine. In connection with the entry into force of the Law of Ukraine “On Protection of the Interests of Business Entities during Martial Law or a State of War”, the State Statistics Service of Ukraine suspends the publication of statistical information for the period of martial law and for three months after its termination. The exception is the publication of information on the consumer price index, separate information on statistical indicators for 2021 and for the period January-February 2022. The article analyzes open data from the State Statistics Service, the National Bank, and think tanks.
Demographic indicators of Ukraine
According to Ella Libanova, Director of the Ptukha Institute for Demography and Social Studies. Ella Libanova, depopulation is an inevitable scenario for Ukraine. A labor shortage is absolutely inevitable.
According to the estimates she presented at the Regional Economic Forum, as of the beginning of this year, the population in the government-controlled areas was 31.6 million people, and now it has slightly increased.
Libanova pointed out that the population forecast for the beginning of 2033 within the borders of 1991 Ukraine ranges from 26-35 million people.
According to her, the potential for demographic growth has been exhausted, and this is compensated for by migration.According to her, the potential for demographic growth has been exhausted, and this can be compensated for by migration.
Economic recovery
Ukraine’s gross domestic product (GDP), after declining by 10.5% in the first quarter of 2023 compared to the first quarter of 2022, started growing in the second and third quarters.
“At the same time, the World Bank forecasts Ukraine’s GDP to grow by 3.5% in 2023 and 4.0% in 2024, which is 1.5 percentage points (p.p.) and 0.5 p.p. higher than the June estimates, respectively,” said Maksim Urakin.
The key risk for our economy remains a longer duration and intensity of the war, as well as a decrease in the volume or loss of rhythm of international assistance, the resumption of a significant electricity shortage due to further destruction of the energy infrastructure and other risks.
Analysis of Ukraine’s foreign trade
Maksim Urakin also drew attention to the factor of the growing negative foreign trade balance, which has been observed since the beginning of the war.
“The negative balance of Ukraine’s foreign trade in goods in January-September 2023 increased by 3.2 times compared to the same period in 2022 – to $19.402 billion from $6.026 billion. This means that the cost of purchasing the goods Ukraine needs is almost $19 billion higher than the income from exporting Ukrainian goods to other countries. “, emphasized Urakin, PhD in Economics.
Ukraine’s financial situation in 2023
According to the expert, the main factors that characterize the state of the Ukrainian economy are public debt, international reserves and inflation.
“According to the calculations made during the preparation of the draft state budget, the projected amount of public debt calculated in national currency will amount to UAH 8,183,862.1 million and will be 104.6% of GDP. The state-guaranteed debt will amount to UAH 476,671.9 million and will be 6.1% of GDP,” said Maksim Urakin.
According to the expert, the main source of funding for Ukraine’s budget is still related to foreign aid.
“Half of the budget is financed through taxes and fees, while the other half is financed through international grants and loans,” he emphasized.
“Ukraine’s international reserves as of October 1, 2023, according to preliminary data, amounted to $39 billion 708.2 million,” the analyst added.
As for inflation, it continues to decline.
“Consumer prices in Ukraine increased by 0.5% in September 2023 after a decline of 1.4% in August and 0.6% in July, according to the State Statistics Service. At the same time, inflation was recorded at 1.9% in September 2022, so in annual terms in September 2023 it decreased to 7.1% from 8.6% in August and 11.3% in July,” Urakin said.
Thus, the economic situation in Ukraine, according to the founder of the Club of Experts, continues to require close monitoring and adaptation of strategies in response to changing conditions.
The article summarizes and analyzes the main macroeconomic indicators of Ukraine. In connection with the entry into force of the Law of Ukraine “On Protection of the Interests of Business Entities during Martial Law or a State of War”, the State Statistics Service of Ukraine suspends the publication of statistical information for the period of martial law and for three months after its termination. The exception is the publication of information on the consumer price index, separate information on statistical indicators for 2021 and for the period January-February 2022. The article analyzes open data from the State Statistics Service, the National Bank, and think tanks.
Demographic indicators of Ukraine
Speaking about the demographic factor in the development of the Ukrainian economy, Maksym Urakin cited the data previously announced by the Director of the Ptukha Ella Libanova Institute for Demography and Social Studies. Ella Libanova, depopulation is an inevitable scenario for Ukraine. A labor shortage is absolutely inevitable.
According to the estimates she presented at the Regional Economic Forum, as of the beginning of this year, the population in the government-controlled areas was 31.6 million people, and now it has slightly increased. Libanova pointed out that the population forecast for the beginning of 2033 within the borders of 1991 Ukraine ranges from 26-35 million people.
According to her, the potential for demographic growth has been exhausted, and this can be offset by migration.
Economic recovery
Ukraine’s real gross domestic product grew by 19.5% in the second quarter of 2023 compared to the second quarter of 2022.
“According to the State Statistics Service’s preliminary estimate, compared to the previous quarter (seasonally adjusted), GDP in the second quarter of this year grew by 0.8%,” said Maksym Urakin.
The key risk for our economy remains the longer duration and intensity of the war, as well as a decrease in the volume or loss of rhythm of international assistance, the resumption of a significant electricity shortage due to further destruction of the energy infrastructure and other risks.
Analysis of Ukraine’s foreign trade
Maksym Urakin also drew attention to the factor of the growing negative foreign trade balance, which has been observed since the beginning of the war.
“The negative balance of Ukraine’s foreign trade in goods in January-July 2023 tripled compared to the same period in 2022, to $13.8 billion from $4.315 billion. This means that the cost of purchasing the goods Ukraine needs is almost $14 billion higher than the income from exporting Ukrainian goods to other countries,” said Urakin, PhD in Economics.
Ukraine’s financial situation in 2023
However, according to the expert, no less important aspects of the economy are public debt, international reserves, and inflation.
“In July 2023, Ukraine’s total public debt increased by 3.1% to a new all-time high: by $4 billion in dollar terms, to $132.92 billion. In its inflation report at the end of July, the National Bank of Ukraine expects the public debt to grow from 78.4% of GDP to 84.6% of GDP this year, to 96.6% of GDP next year, and to 98.2% of GDP in 2025,” said Maksym Urakin.
According to the expert, the main source of funding for Ukraine’s budget is still related to foreign aid.
“Half of the budget is financed through taxes and fees, while the other half is financed through international grants and loans,” he emphasized.
“Ukraine’s international reserves declined in August and amounted to $40.3 billion as of September 1, 2023,” the analyst added.
As for inflation, it showed a slowdown.
“In August 2023, inflation in Ukraine decreased by 1.4% after a 0.6% decline in July and a 0.8% increase in June. In 2022, the annualized inflation rate was almost 27%,” Urakin said.
Thus, the economic situation in Ukraine, according to the founder of the Club of Experts, continues to be complex and multifaceted, requiring close monitoring and adaptation of strategies in response to changing conditions.
Ukraine’s key macroeconomic indicators have stabilized somewhat, but continue to testify to the significant role of international structures in keeping the Ukrainian economy in working order.
The National Bank estimates that Ukraine’s GDP decline in the first quarter of 2023 year-on-year has slowed significantly to 13.5% from 31.4% and 30.6% in the fourth and third quarters of 2022, respectively. Meanwhile, Ukraine’s Finance Minister Serhiy Marchenko gave his forecast for Ukraine’s GDP growth in 2023 to 3.2%, while the government previously estimated GDP growth at 1% and the National Bank recently improved it from 0.3% to 2%. Investment firm Dragon Capital also forecast real GDP growth of 3% in 2023, while it previously expected it to fall by 0.5%. The World Bank has worsened its forecast for Ukraine’s gross domestic product growth for this year to 2% from 3.3%, which it predicted in January 2023.
Recall that Ukraine’s GDP in the first quarter of 2023 fell by 10.5% compared to the first quarter of 2022 after falling by 31.4% in the fourth quarter, 30.6% in the third quarter, 36.9% in the second quarter and 14.9% in the first quarter of last year.
At the same time, the Ukrainian authorities have set a super ambitious goal to increase GDP to $1 trillion over 10 years, First Deputy Prime Minister and Economy Minister Yulia Sviridenko said at the Ukraine Recovery Conference in London.
Maxim Urakin, founder of the Kiev-based think tank Club of Experts, drew attention to the significant decline in Ukraine’s foreign trade balance. “The negative balance of Ukraine’s foreign trade in goods in January-March 2023, according to the State Statistics Committee, increased 26 (twenty-six) times compared to the same period of 2022 – to $5.394 billion from $0.208 billion. Exports of goods from Ukraine for this period compared to the first quarter of 22 decreased by 26.1% – to $10.306 billion, and imports increased by 10.9%, to $15.699 billion,” – said Maxim Urakin.
Military expenditures of the state budget continue to grow. Budget expenditures to support the AFU in the form of purchase of military equipment, weapons, ammunition, defense products, personal protective equipment in May increased to UAH 43.4 billion in February (15.6% of all expenditures) from UAH 42.5 billion (18.5%) in April and UAH 34.4 billion (15.3%) in March.
Ukraine in January-March 2023 realized industrial products (goods, services) in the amount of UAH 755.755 billion, which is 14.2% less than in January-March 2022 (UAH 880.419 billion), including outside the country – in the amount of UAH 137.783 billion.
The total state debt of Ukraine in April 2023 increased by 3.6% and reached a new historical maximum: in dollar terms – by $4.37 billion, to $124.28 billion, in hryvnia terms – by UAH 159.9 billion, to UAH 4 trillion 544.9 billion.
At the same time, due to international aid, Ukraine’s international reserves reached a record high in June, amounting to almost $39bn, which is a record high in the history of independent Ukraine, the head of the National Bank of Ukraine, Andriy Pyshnyy, has said. The head of the National Bank specified that in June the government’s accounts received: $1.6 billion from the EU, $1.2 billion from the USA, $69.1 million from the World Bank and $15.0 million from the government of Finland.
Inflation in Ukraine in May 2023 slightly accelerated to 0.5% in May from 0.2% in April, and on an annualized basis in May-2023 it fell to 15.3% from 17.9% in April, 21.3% in March, 24.9% in February and 26.6% in December.
Retail turnover of Ukraine in January-March 2023 compared to the same period of 2022 decreased by 9.1% and amounted to 390.1 billion UAH. According to the statistical Department, at the same time in March of this year recorded an increase in retail turnover to March last year by 35.5%, while in February the decline was 22.6%. Recall that the retail turnover of Ukraine in 2022 compared to 2021 decreased by 21.4% and amounted to 1.398 trillion UAH.
The negative balance of Ukraine’s foreign trade in goods in January-October 2022 increased 2.6 times compared to the same period in 2021 – to $7.050 billion from $2.691 billion, said the State Statistics Service. According to them, exports of goods from Ukraine during the reporting period compared to January-October 2021 decreased by 32.3% to $36.859 billion, imports – by 23.2% to $43.909 billion.
Ukraine’s state budget deficit in November rose to a record 170 billion UAH from 143.4 billion UAH a month earlier, including the general fund to 163.3 billion UAH from 147.1 billion UAH, the Ministry of Finance said on its website.
Total national debt of Ukraine in November 2022 increased by 4.2%: in dollar terms – by $4.34 billion, to $107.46 billion, in UAH – by 158.7 billion, to 3.930 trillion UAH, according to the Ministry of Finance website.
According to them, direct public debt last month increased by 4.5% to $97.69 billion, or 3.572 trillion UAH, mainly due to a loan from the European Union ($2.95 billion) and placement of government bonds ($0.56 billion, or 20.44 billion UAH).
International reserves of Ukraine as of December 1, 2022, according to preliminary data, amounted to $27 billion 422.2 million (in equivalent), which is 10.7% more than at the beginning of November ($25 billion 244.2 million), according to the National Bank of Ukraine.
One third (34%) of Ukrainian refugees in Germany want to stay in this country until the end of hostilities at home, while a quarter (26%) are planning to stay in Germany permanently, Deutsche Welle wrote on Thursday with reference to the results of a representative study conducted by three German sociological institutions together with the Federal Office for Migration and Refugees (BAMF).
Russian attacks on the energy infrastructure increased the rate of decline in Ukraine’s economy this November to roughly 41 percent last November, First Deputy Economy Minister Denis Kudin said. “Our expectation for November is minus 41%. That’s significantly deeper than what we forecasted before,” he said during a discussion at the Center for Economic Strategy (CES).
A month earlier, First Deputy Prime Minister and Economy Minister Yulia Sviridenko said at a meeting with U.S. media that Russia’s October energy slump increased the drop in GDP to 39% by October 2021, which is worse than the September-August figure of 35%.
Kudin also pointed out that for this year as a whole, the GDP decline forecast has been worsened to 33.2% from 32%.
Ukraine since the beginning of 2022/2023 marketing year (MY, July-June) and exported 19.66 million tons of crops, including 10.76 million tons of corn (54.7% of total supplies), 7.29 million tons of wheat (37%) and 1.53 million tons of barley (7.8%).
The total area of residential buildings with permits for construction work (new construction) in January-September 2022 halved compared to the same period in 2021 to 5.2 million square meters, said the State Statistics Service.
Commercial real estate operations and construction lead the list of sectors with the highest share of bad loans (NPLs) – 70.2% and 68%, respectively, according to the National Bank in the Report on Financial Stability on the analysis of the largest corporate borrowers on December 1, which accounted for 60% of the net loan portfolio of banks.
According to the document, the total share of NPL in the real estate sector is 62.8%, followed by mechanical engineering – 62.5%, while in the sectors of energy and utilities, as well as metallurgy, the figures are much lower – 46.8% and 45%, respectively (42.7% in the green energy sector).
Head of the project “Economic Monitoring” candidate of economic sciences Maksim Urakin
Russian attacks on critical infrastructure facilities in October accelerated the fall in GDP to 39% from October 2021, which is worse than in September-August – 35%, said First Deputy Prime Minister – Minister of Economy of Ukraine Yulia Svyrydenko at a meeting with representatives of the American media.
The fall in Ukraine’s GDP in 2022 could be 33-35%, Finance Minister Serhiy Marchenko said at a briefing in Kyiv.
Massive Russian missile strikes on the Ukrainian energy infrastructure, which began in October, stopped the trend of slowing down the decline in the Ukrainian economy, its forecast for the year has been worsened from 32% to 35%, the ICU investment group reports in an updated macroeconomic forecast.
Dragon Capital investment company, one of the leaders in the Ukrainian market, worsened its forecast for a decline in real GDP this year by 2 percentage points, to 32% and retained its forecast for a decline in 2023 by another 5%, despite the improvement in the key assumption about the course of the war.
Exports of goods from Ukraine in October fell by 8.2% compared to September, to $3.805 billion, while imports rose by 2.6%, to $4.615 billion, Deputy Economy Minister and Trade Representative Taras Kachka said.
The deficit of Ukraine’s foreign trade in goods in January-September 2022 increased 2.4 times compared to the same period in 2021, to $5.419 billion from $2.264 billion.
The growth of consumer prices in Ukraine in October 2022 accelerated to 2.5% from 1.9% in September, 1.1% in August and 0.7% in July.
The money supply in Ukraine (M3), after growing by 0.8% in September, added another 2.3% in October, or UAH 52.6 billion, to UAH 2.330 trillion, the National Bank of Ukraine (NBU) said.
Ukraine, which has achieved a deferral of repayment and payment of a significant part of external obligations to private creditors and the Paris Club, may enter into negotiations on the final terms of restructuring for the state debt closer to the end of the war, Deputy Head of the President’s Office Rostyslav Shurma has said.
Economic Monitoring’s Project Manager – PhD in Economics, Maksim Urakin
The World Bank has raised its forecast for the growth of Ukraine’s gross domestic product in 2023 from 2.1% to 3.3%, according to the Economic Update.
The National Bank of Ukraine (NBU) has upgraded its estimate of a decrease in GDP in 2022 to around 32% from 37.5% in the previous forecast, the press service of the regulator said.
On October 28, 2022, S&P Global Ratings affirmed its ‘CCC+’ long-term foreign and local currency issuer credit ratings on Ukraine’s capital city Kyiv, the outlook remains stable, the company said on its website.
The Cabinet of Ministers of Ukraine has approved the draft state budget for 2023 for second reading, Prime Minister Denys Shmyhal said.
The deficit of Ukraine’s foreign trade in goods in September amounted to $354 million, which is 66.7% less than in August, Deputy Minister of Economy and Trade Representative of Ukraine Taras Kachka said.
The deficit of Ukraine’s foreign trade in goods in January-August 2022 increased by 2.9 times compared to the same period in 2021 – to $5.421 billion from $1.895 billion, the State Statistics Service reported.
Inflation in Ukraine accelerated to 24.4% year-over-year in September from 23.8% in August, according to the macroeconomic and monetary monthly review of the National Bank of Ukraine (NBU).
The growth of consumer prices in Ukraine in September 2022 accelerated to 1.9% from 1.1% in August and 0.7% in July, the State Statistics Service reported on Monday.
The deficit of the state budget of Ukraine for January-September 2022 was UAH 493.4 billion, in particular that of the general fund – UAH 495.3 billion with a planned deficit for this period of UAH 1.018 trillion, such preliminary results were reported by the Ministry of Finance.
The total public debt of Ukraine in August increased by 1.3%: in dollar terms by $1.24 billion – up to $96.79 billion, in hryvnia – by UAH 45.4 billion, up to UAH 3.585 trillion, according to data on website of the Ministry of Finance.
The volume of computer services in January-September 2022 increased by 13% and amounted to almost $5.5 billion, the IT Ukraine association (ITU) reported, citing data from the National Bank of Ukraine.
From the beginning of the 2022/2023 marketing year (MY, July-June) and until October 21, Ukraine exported 11.52 million tonnes of grain crops, of which 6.17 million tonnes of corn (53.5% of the total supply), some 4.36 million tonnes of wheat (37.8%) and 950,000 tonnes of barley (8.2%).
Economic Monitoring’s Project Manager – PhD in Economics, Maksim Urakin
