Energy system restoration improved economic growth forecast for 2023 from 0.3% to 2% – NBU

According to the press service of the National Bank of Ukraine (NBU), the NBU has revised its economic recovery forecast for Ukraine this year from 0.3% to 2%, considering the rapid restoration of the energy system.

The regulator notes that the economy will return to growth this year, which will accelerate in the coming years against the backdrop of reduced security risks. The economic growth forecast for 2023 has been improved from 0.3% to 2% due to the rapid restoration of the energy system and soft fiscal policy. The NBU expects no significant electricity deficits, except for local and situational deficits in the second half of the year.

Meanwhile, the increase in budget spending on the significant amounts of international financial aid will support economic activity and consumption. The NBU added that reduced security risks from next year, assumed in the baseline scenario of the NBU forecast, would contribute to accelerating economic growth to 4.3% in 2024 and 6.4% in 2025.

The de-occupation of territories and full opening of Black Sea ports will allow for gradual growth in industrial production and increase in yields. In addition, the return of some forced migrants is expected to lead to an expansion of internal demand. The NBU emphasizes that the main assumption of the forecast remains the preservation of high security risks until the beginning of 2024. The regulator warns that prolonged military actions and their higher intensity may have a significant negative impact on economic activity and may worsen inflation and exchange rate expectations, creating additional challenges for macro-financial stability.

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