Ukrainian Economy Will Shrink by Almost 32% in 2022 – the National Bank

According to the recent statement by the National Bank of Ukraine, this year inflation will accelerate to 30%, and the economy will contract by almost 32% due to the damage caused by Russia’s full-scale war on Ukraine

According to the quarterly inflation report, provided expected decline in security risks and a pickup in domestic demand and investment activity, the GDP will grow by around 4%–5% per year in 2023–2024.

“This year’s economic downturn has been driven by lower domestic demand, disrupted logistics, and large losses of labor force and production potential caused by the war”, the NBU reports predicting the unemployment rise to 30%.

Fiscal policy is unprecedentedly accommodative and will remain so until the end of 2024. This will support the economy during the war and, coupled with the easing of security risks, contribute to economic recovery.

Inflation, which is currently 25%, is expected to decline – to 21% next year, and to below 10% in 2024.

International financing will remain the primary source of covering the budget deficit, which will narrow gradually to 12% of GDP in 2024, down from 25% of GDP in 2022.

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