The European Bank for Reconstruction and Development (EBRD) worsened the forecast for the growth of Ukraine’s economy in 2023 from the previously expected 25% to 8%. This is stated in the updated forecast of EBRD.
Expectations regarding the drop in the country’s GDP in 2022 remained at the same level – 30%.
“For 2023, the EBRD has lowered its forecast of an economic rebound to 8% from the previous 25% expected in May, when the substantial recovery work would already be underway. The reduced forecast is a sign of how heavily uncertainty over the shape of the future is weighing on Ukraine’s economic prospects,” the message says.
The bank notes that while fighting has become more concentrated in recent months and has engulfed an area that generates only about 20% of GDP, the destruction of human capital, infrastructure and productive capacity has been significant.
In particular, due to the movement of the population abroad or within the country, economic activity has been seriously disrupted even in those regions where there were no hostilities.
“Russia’s blockade of ports, hampering agricultural exports, and the devastation of many steel-producing facilities in the east of the country have decimated the country’s two main exports, which generated almost half of all pre-war export revenues,” the EBRD noted.
At the same time, the recent recovery of grain exports from some ports and the expectation of sufficient external financing may become positive factors for economic activity in the later months of 2022.
“However, the risks to forecasts are exceptionally high, depending on the duration and intensity of the war,” the bank emphasizes.
As GMK Center reported earlier, the Ministry of Economy predicts growth in Ukraine’s GDP in 2023 by 15.5%. The actual rate of growth will depend on the course of the war. In 2022, the country’s economy will fall by 30%, the agency expects.
Also, the National Bank of Ukraine predicts a 33% decline in the country’s economy by the end of 2022 and a subsequent recovery by 5-6% in 2023-2024, subject to the completion of the active phase of the war and the unblocking of the Black Sea ports.