NBU downgrades economic growth forecast for this year from 3.6% to 3% due to energy sector losses

Despite the war, Ukraine's economy is recovering and real GDP continued to grow in the first quarter of this year. Due to the shelling of critical infrastructure facilities by the Russians, the economic growth forecast for this year decreased from 3.6% to 3%. Writes UNN with reference to the NBU.

Despite the war, Ukraine's economy continues to recover. Thus, in the first quarter of 2024, Ukraine's real GDP continued to grow. This was further facilitated by the high level of adaptability of enterprises and the population to activities in wartime conditions. The economy is supported by significant budget expenditures on defense and social protection of citizens.

Economic growth could have been more rapid, but due to uncertainty with the receipt of international aid, the government was cautious about spending budget funds in the first quarter. This affected the economy as a whole – the pace of recovery slowed down, and GDP indicators at the beginning of the year were slightly worse than the NBU expected

Since mid-March, support for Ukraine from international partners has increased. The country has raised funds from the EU, Canada, the International Monetary Fund and the World Bank. At the same time, the EU introduced a long-term support program for Ukraine for the period 2024-2027 with a budget of 50 billion euros, and the United States approved the corresponding assistance budget for the current year.

Among other positive news, it is worth noting the preservation of the functionality of the sea corridor, through which the export of Ukrainian food and metallurgical products continues, despite Russian attacks. At the same time, we also faced a number of risks.

In particular, Russian missile strikes this spring caused serious damage to critical infrastructure, especially in the energy sector. Restoration of these facilities in a short time is not possible, and existing generation capacities require planned repairs. Because of this, periodic electricity shortages are possible in different regions, which complicates economic recovery.

It is precisely because of the loss of the energy sector that the NBU has lowered its economic growth forecast for this year from 3.6% to 3%. However, economic growth is expected to accelerate to 4-5% in the coming years. This will be facilitated by further adaptation of businesses and the population to new challenges, as well as significant budget incentives while maintaining the support of international partners

recall

Earlier, the NBU reported that Ukraine's real GDP growth in the first quarter of 2024 was lower than the National Bank expected, due to limited budget expenditures and the blocking of the Ukrainian-Polish border.