Ukraine’s GDP will fall by 30% in 2022, and the country’s economy will grow by 25% next year, the European Bank for Reconstruction and Development (EBRD) published such an updated forecast on Tuesday, while in March it estimated this year’s decline at 20%, and growth in the next year at 23%.<\/p>\n
GDP is expected to decline by 30% in 2022, followed by a 25% increase in 2023, assuming a massive recovery effort takes place, the report says.<\/p>\n
Such a forecast, if implemented, means that in 2023 Ukraine’s GDP will be 12.5% lower than at the beginning of 2022.<\/p>\n
“How long the hostilities last, the shape of any post-war settlement, the extent of reconstruction and how many refugees return home will also influence the recovery\u2019s speed,” the report says.<\/p>\n
“The war is putting Ukraine\u2019s economy under enormous stress, with the heavy devastation of infrastructure and production capacities. It is estimated that between 30% and 50% of businesses have stopped their operations completely, causing about half of all employees to lose their jobs and income. Approximately 10% of the pre-war population has fled Ukraine and an additional 15% are displaced within the country. All this is severely weakening companies\u2019 finances, thus exposing the banking sector to a drastic deterioration of asset quality,” the bank said.<\/p>\n
“Huge production and logistical disruptions have caused inflation to rise 13.7% year-on-year in March 2022, and it is likely that inflationary pressures will persist throughout the year. Plummeting tax revenues, combined with government spending way above the budget, have opened a fiscal gap of at least $ 5 billion a month. Yet, because the fiscal gap is accompanied by a substantial external gap as well, it is clear that war bonds purchased by domestic banks and monetary financing of fiscal deficit allowed under martial law could plug only a small portion of the gap,” it said.<\/p>\n
“In March, the external gap was largely covered by IFI lending, but more sustainable financing predominantly based on grants is needed,” it said.<\/p>\n
According to the EBRD document, its estimate of the fall in Russia’s GDP this year has been maintained at the level of 10%, and in 2023 the bank predicts zero dynamics.<\/p>\n
The GDP of Belarus, according to the EBRD forecast, will decrease by 4% in 2022 (in March, the bank predicted a decline in the Belarusian economy this year by 3%). Zero dynamics of the economy is expected in 2023 (the forecast has not changed since March).<\/p>\n
As reported, with reference to the estimates of the World Bank, which before the war expected the growth of the Ukrainian economy this year by 3.2%, it will fall by 45.1%. According to its report from the beginning of April, in 2023 the Ukrainian economy is expected to recover by only 2.1%, which is also worse than previous expectations of 3.5%.<\/p>\n
The National Bank of Ukraine predicts a decrease in the country’s GDP in 2022 by at least a third, refusing to make more detailed estimates. The IMF expects a 35% decline this year, also not giving forecasts for the future.<\/p>\n