The International Monetary Fund (IMF), which previously estimated the dynamics of the Ukrainian economy this year from a 3% decline to a 1% growth, is inclined to believe that GDP growth in 2023 may be at the upper limit of this range.
According to the materials of the fund, this is due to new data available that the reduction in real GDP of Ukraine in 2022 was slightly less than estimated - 29.2% versus -30.3% due to a more robust fourth quarter - 31.4% decline instead of the previous estimate of 35%.
"Newly available data suggest that the real GDP contraction for 2022 was somewhat less than previous staff estimates (29.2% y/y vs. 30.3% y/y), on account of a more robust fourth quarter. According to Q4 2022 flash estimates, Q4 real GDP growth is now estimated at 31.4% y/y compared with 35% y/y estimated by staff. This reflects a less severe than expected impact on economic activity from the countrywide power outages stemming from the attacks on critical energy infrastructure, as well as increased spending for repairs," the IMF said.
"Accounting for a stronger Q4 2022 would, all else equal, help lift growth in 2023 by reducing negative carryover effects," it said.
The IMF predicts growth to accelerate to 3.2% in 2024 and to 6.5% in 2025.
In nominal terms, the fund estimated the decline in Ukraine's GDP last year to UAH 4.9 trillion from UAH 5.46 trillion in 2021 and expected its growth to UAH 6.05 trillion in 2023 and UAH 7.365 trillion in 2024.
According to its forecasts, inflation will decrease 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 assumed 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 will grow by 5%.
At the same time, the unemployment rate will fall from 24.5% to 20.9% this year, to 11.9% next year, and to 9.7% in 2025.
The government of Ukraine also predicts GDP growth of 1% this year. In January, the National Bank lowered its estimate to 0.3%, but recently announced a high probability of its next upward revision, including by 1 percentage point due to a better energy supply situation than expected, Interfax-Ukraine reports.
