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”.
A new video on YouTube channel of the analytical center “Club of Experts” examined the options for the upcoming presidential and parliamentary elections in Turkey. Ukrainian experts expressed their opinions and gave forecasts regarding the political situation in this country.
Mohammad Farajallah, editor-in-chief of the Internet publication “Ukraine in Arabic,” stressed that the upcoming elections in Turkey are of great importance for the region and arouse the interest of the international community.
“Turkey is an important player on the world stage, and its domestic policy directly affects the situation in the region and beyond. Therefore, the results of the elections will be monitored with great attention,” he noted.
In turn, the founder of the Club of Experts, Maksim Urakin, Ph.D. in Economics, shared his vision of possible scenarios after the elections. He stressed that there are two main political forces fighting for leadership in Turkey: the Justice and Development Party (AKP) led by President Recep Tayyip Erdogan and the Republican People’s Party (CHP). Kemal Kılıcdaroğlu, allied with five other opposition political forces.
“Two scenarios are possible. If the AKP wins, we can expect a continuation of the policies Erdoğan has pursued in recent years, with a focus on enhancing domestic stability and strengthening Turkey’s position in the international arena. On the other hand, if the CHP wins, we may see a more pro-Western orientation and increased cooperation with the European Union and the United States,” the expert said.
According to Urakin, a win for either candidate in the first round is unlikely, and the winner of the presidential race will most likely be determined by a second ballot.
Both experts also noted the significance for Ukraine of the election results in Turkey.
“Ukraine has close economic and political ties with Turkey, so the election results will have a direct impact on our relations and cooperation. Over the last year, as a result of the war, trade turnover between our countries has decreased, but I believe that if the current political course is maintained, we can expect further development of trade and economic relations between Ukraine and Turkey,” said Maxim Urakin.
In addition, the expert cited statistics on exports from Ukraine to Turkey in 2022, according to which it has decreased significantly.
“Last year, the volume of Ukrainian exports to Turkey was about 3 billion dollars as opposed to more than 4 billion in 2021, that is, we see a drop of 29%,” Urakin said.
According to Mohammad Farajallah, in the current geopolitical situation Turkey is an important partner of Ukraine in various spheres, which include both military support (UAV Bayraktar, light armored vehicles) and cooperation in economy, energy and other spheres.
The expert also suggested that if the opposition wins, Turkey is more likely to join sanctions against Russia.
“Naturally, the new government will be as close to the West as possible and can be included in a common unified Western policy against Russia. This, of course, will be to our advantage. But these are just preliminary words for now, perhaps they (the opposition – ed.) will come, look at the numbers and continue Erdogan’s current policy,” said Farajallah.
It should be noted that on the eve of the voting, Erdoğan lags behind his main rival Kılıçdaroğlu by more than 5%, according to a poll published by the Turkish sociological center KONDA on May 11.
Thus, Erdoğan gets the support of 43.7 percent of respondents, while Kılıçdaroğlu gets 49.3 percent.
The poll also reveals that neither candidate gets more than 50% of the votes, which means that if these data are confirmed in the elections, the winner will be chosen in the second round, which is scheduled for May 28.
The KONDA polling service conducted personal interviews with 3,480 people in 35 provincial centers.
At the same time, according to other surveys, in particular the Istanbul-based Center for Operational Social Research (Yöneylem), Erdoğan’s party was supported by 35.2% of voters in the parliamentary elections and Kılıcdaroğlu’s CHP by 30.7%.
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The Club of Experts and Maksim Urakin, PhD in Economics, have prepared a summary of the main macroeconomic indicators of Ukraine in the beginning of 2023.
So, the Ministry of Economy of Ukraine revised the macro forecast for 2023, worsening the GDP growth forecast from 3.2% to 1%, primarily because of the assumption that the military operations will not end in the middle of the year, and will last “almost a whole year”, said Deputy Minister Sergei Sobolev.
Ukraine’s real gross domestic product fell 31.4% in the fourth quarter of 2022 compared to the fourth quarter of 2021 after falling 30.8% in the third quarter, 37.2% in the second and 15.1% in the first, the State Statistics Service said Monday. At the same time, according to the consensus forecast of eight companies and non-governmental institutions, which was released by the Center for Economic Strategy, the real gross domestic product of Ukraine in 2023 will decline by 0.1%, with estimates ranging from a decline of 4.6% to growth of 5.5%. The economic recovery will be barely visible this year, expected to moderate GDP growth of 2%, which will bring real GDP at the end of this year at 70-72% of prewar 2021, such macroeconomic forecast published by ICU investment group.
According to deputy governor of the NBU Serhiy Mykolaychuk, the economic situation in Ukraine in the first quarter of 2023 is developing much better than the National Bank of Ukraine (NBU) expected in its January forecast, especially in the energy supply, so it is highly probable that the central bank will improve its current GDP growth forecast for this year by 0.3% at the end of April. Meanwhile, the International Monetary Fund forecasts the dynamics of the Ukrainian economy this year from 3% decline to 1% growth followed by 3.2% growth in 2024 and 6.5% growth in 2025.
And 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 the fact that GDP growth in 2023 may be at the upper limit of this range.
Ukraine’s GDP, after falling by 29.2% last year, will grow by 0.5% this year and by 3.5% next year, predicts the World Bank, which in January this year expected more rapid growth: by 3.3% in 2023 and by 4.1% in 2024.
At the same time, the real gross domestic product of Ukraine after growing by 3.4% in 2021 in 2022 due to full-scale Russian military aggression fell by 29.1%, and the negative balance of Ukraine’s foreign trade in goods in January-February 2023 increased 3.4 times compared to the same period in 2022 – to $3.713 billion from $1.083 billion.
The state budget deficit of Ukraine in February 2023 increased to 88.8 billion UAH from 72.3 billion UAH in January, including the general fund deficit to 93.2 billion UAH from 78.9 billion UAH.
The aggregate state debt of Ukraine in February decreased by 0.5%: in dollar terms by $0.59 billion – to $116.01 billion, in UAH terms – by UAH 21.62 billion, to UAH 4.24 trillion.
At the same time, at the end of January 2023, Ukraine’s consolidated balance of payments was $1.2 billion in surplus, while in January 2022 the deficit was $1.8 billion.
International reserves of Ukraine as of March 1, 2023, according to preliminary data, amounted to $28.865 billion, which is 3.5%, or $1.064 billion, less than in January 2023 due to interventions of the National Bank to sell currency to cover the difference between supply and demand in the foreign exchange market.
The growth of consumer prices in Ukraine in February 2023 slowed to 0.7% from 0.8% in January, returning to the level of December last year.
The saturated market of Ukraine and its geographical location make our country an attractive market for foreign goods. However, importing goods to Ukraine is a complex process that requires knowledge of legislation, international relations, and customs clearance procedures. These and other issues were discussed by the founder of the Club of Experts Maxim Urakin and the President of the Ukrainian Exporters Club Yevheniia Lytvynova in a new video on the YouTube channel “Club of Experts”.
According to Maksym Urakin, before starting to import goods, it is necessary to conduct a detailed analysis of the market and legislation of Ukraine and the exporting country, as well as calculate all costs associated with delivery, customs clearance and taxes.
“This will help you draw up a clear action plan and avoid unpleasant situations during the import process,” the expert emphasized.
Yevheniia Lytvynova, President of the Ukrainian Exporters Club, also emphasizes the need to research the market and check the reputation of potential suppliers.
“Market research and checking the reputation of potential partners can help you find a reliable supplier,” she said.
According to Yevheniia Lytvynova, successful import of goods requires a thorough analysis of all aspects of the importer’s future business strategy.
“Before you start importing goods, you need to conduct a detailed analysis of the market, legal requirements and your capabilities, as well as calculate all the costs associated with delivery, customs clearance and taxes. This will help you draw up a clear plan of action and avoid unpleasant situations during the import process,” emphasized Lytvynova.
Regarding the documents to be prepared for importing goods, Lytvynova noted that the contract between the importer and exporter, invoice, transportation document (e.g., waybill or bill of lading), quality certificate and certificate of origin should be put in the forefront.
“In addition to these basic documents, additional documents may be required depending on the characteristics of the goods and the requirements of Ukrainian legislation. In particular, licenses, certificates of conformity, permits and other documents confirming compliance with safety, hygiene, environmental requirements, etc. may be required,” she explained.
Maksym Urakin also emphasized that studying local legislation and choosing a reliable supplier are also very important steps in the import process. According to the experts, in order to successfully sell goods in Ukraine, it is also necessary to take into account the difficulties that may arise after their delivery.
“Even if the goods are of high quality and interesting, they still need to be sold. But here in Ukraine, even after obtaining certificates and relevant permits, sales can be restricted due to various customs barriers, which leads to breach of contract. Therefore, we advise our companies to conduct a detailed analysis of the market and legal requirements. This will allow them to prepare the right documentation and comply with all requirements,” said Yevgeniya Lytvynova.
To increase export sales, experts recommend improving product quality and providing buyers with more information about their goods.
“Nowadays, many buyers check the quality of goods and their compliance with standards. If your products don’t meet the requirements, they simply won’t buy them,” emphasized Maksym Urakin.
In this regard, experts advise to focus on developing the quality of goods and their competitiveness. In addition, according to Maxim Urakin, it is important to participate in international exhibitions and forums where you can find new partners and establish contacts with potential suppliers.
Thus, according to the experts, it is very important to comply with all the requirements and norms set by law when importing goods, conduct a detailed market analysis and check the reputation of suppliers. It is also important to ensure the quality of goods and timely delivery, while considering all possible risks and costs. Importing goods can be a very profitable business if you organize it properly. Experienced experts advise to study the market and determine your capabilities to avoid unpleasant situations and ensure successful business development.
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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
The fall in real gross domestic product (GDP) of Ukraine in 2022 is estimated at 30.4% [±2%], which is better than preliminary forecasts, the Economy Ministry said. After falling by about 30% in 2022, the Ukrainian economy may lose from zero to 5% this year if the hot phase of the war continues until the third quarter, but next year its growth will exceed 10%, founder and head of Dragon Capital investment company Tomas Fiala gave such a macro forecast.
The National Bank of Ukraine (NBU) will worsen the forecast estimate of real GDP growth in Ukraine in 2023 from 4% to 1-3.3%, while inflation by the end of the year will slow down growth to 19-21%, bankers polled by Interfax-Ukraine believe.
The National Bank of Ukraine (NBU) has downgraded its forecast for the growth of the country’s gross domestic product (GDP) in 2023 to 0.3% from 4% in the previous forecast, which is largely due to the extension of the base scenario with a full-scale war for another six months – until the beginning of 2024.
The Ministry of Economy confirms the forecast for the growth of the Ukrainian economy in 2023 by 3.2%, despite the worsening of its forecast by the National Bank of Ukraine (NBU) from 4% to 0.3% this week, First Deputy Minister Denys Kudin has said.
The negative balance of Ukraine’s foreign trade in goods in January-November 2022 grew 2.3-fold compared to the same period in 2021, to $8.524 billion from $3.635 billion, the State Statistics Service reported.
Inflation in Ukraine accelerated to 27.5% in December, but remained below the October forecast of the National Bank (30%), according to the macroeconomic and monetary review published by the NBU.
Consumer price growth in Ukraine in December 2022 remained at the level of November – 0.7% compared to 2.5% in October, 1.9% in September and 1.1% in August, returning to July level, the State Statistics Service of Ukraine reported.
State budget expenditures to support the Armed Forces of Ukraine in the form of the purchase of military equipment, weapons, ammunition, defense products, and personal protective equipment in December amounted to UAH 38 billion (11.5% of all expenditures) compared to 18.4 UAH billion in November (7%) and UAH 35.9 billion in October (16.1%).
According to the forecast of the Ministry of Economy, the grain harvest in Ukraine in 2023 will be about 49.5 million tonnes, which is better than the estimate of the National Bank of Ukraine (NBU) at 46 million tonnes, First Deputy Minister Denys Kudin told.
PhD in Economics, Maksim Urakin
