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IMF improves forecast for Ukraine's economic growth to 2% in 2023

by Dominic Culverwell October 10, 2023 7:55 PM 2 min read
A shop vendor at a market in Kramatorsk, Donetsk. (Photo by Jose Colon/Anadolu Agency via Getty Images)
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The International Monetary Fund (IMF) increased its forecast for Ukraine's gross domestic product (GDP) growth this year to 2% as the country successfully grapples with problems caused by Russia’s full-scale invasion.

The IMF’s World Economic Outlook published on Oct.10 foresees Ukraine’s economy growing by 3.2% next year and 4% in 2028.

The figure is a huge improvement on the organization’s forecast in April which estimated a GDP decline of 3% by the end of 2023.

Russia's invasion caused a major hit to Ukraine's economy, which suffered a whopping 29.1% fall in GDP last year. However, businesses and households have adapted to war-time conditions with declining inflation and stability in the foreign exchange markets, the IMF noted.

Russia’s Black Sea blockade and termination of the grain corridor is impacting Ukraine’s agricultural sector but alternative routes for agricultural products are in place, including ports on the Danube River.

Energy companies are also more prepared for Russian attacks on energy infrastructure following blackouts that began last October.

The Fund, which supported Ukraine with a $15.6 billion loan over four years in March, noted that international assistance has helped the country’s economic recovery.

Foreign reserves amounted to $39.7 billion at the end of September, far higher than the $31.6 billion volume in the same period last year, the National Bank of Ukraine (NBU) said last week.

The IMF predicts unemployment will fall from 24.5% in 2022 to 19.6% this year and 10.6% next year.

At the same time, the report says inflation will drop to 17.7% this year down from 20.2% last year.

Ukraine’s GDP grew for the first time since the start of the war by 19.5% year-on-year in the second quarter of 2023, the Kyiv Independent reported on Sept. 25.

The World Bank released its own economic forecasts last week. Its October report predicts Ukraine’s GDP to grow by 3.5% this year.

The Ukrainian Government believes GDP growth will reach 4% at the end of 2023, citing preliminary data from the Economy Ministry that estimated 5.3% growth from January to September.

Inflation in Ukraine falls to 7.1% in September
Consumer prices in Ukraine fell to 7.1% by the end of September, down from 8.6% by the end of August, as inflation cools in the country.
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