The International Monetary Fund has unexpectedly improved the forecast of real GDP growth of Ukraine to 4% during the current year, as well as to 2.5-3.5% in 2025.
Points of attention
- Ukraine's economy continues to demonstrate stability even against the background of the war.
- Inflation in the country increased to 9.7%.
- Despite improved forecasts, risks for Ukraine remain high, particularly due to Russian attacks on energy infrastructure.
What will happen to Ukraine's GDP?
It is indicated that the Fund's team reviewed the EFF program for Ukraine for the sixth time.
Experts draw attention to the fact that the economy continues to demonstrate resilience even against the backdrop of devastating challenges associated with Russia's war against Ukraine, which has been going on for 1,000 days.
After conducting a detailed analysis of all available factors, IMF experts announced a forecast for real GDP growth in 2024 — it will be 4%, but in 2025 a slowdown to 2.5-3.5% is predicted.
As expected, inflation rose to 9.7 percent year-on-year in October, mainly due to higher food and labor costs, but inflation expectations remain stable, the report said.
Key problems have not disappeared
What is important to understand is that as recently as a month ago, gross international reserves stood at US$36.6 billion thanks to the continuation of large external official support.
Despite this, as experts note, the risks remain extremely high, especially against the background of intensifying Russian attacks on Ukraine's energy infrastructure.
The updated indicators are more optimistic for Ukraine, in particular, based on the expected results of this year. Thus, in the latest report "World Economic Outlook" (WEO), the Fund predicted maximum growth for Ukraine in 2024 at the level of 3.0%, and in 2025 — no higher than 2.5%.
It is also worth noting that the supplementary budget for 2024 and the budget for 2025 correspond to the program parameters.
According to the latest forecasts, the budget deficit next year will reach 19% of GDP, reflecting the current spending needs due to the war.
