Ukraine's economy grew by 5.3% in 2023: the NBU explains the reasons

Ukraine's economy grew by 5.3% year-on-year in 2023, following a recession a year earlier and despite Russia's war against Ukraine. The GDP growth was made possible by the high adaptability of business, stabilization of the energy sector, and loose fiscal policy. This was reported by the National Bank of Ukraine , UNN.

Ukraine managed to achieve GDP growth after a deep recession in 2022 (by 28.8%) even in the face of continued active hostilities, high security risks, and terrorist attacks by the Russians, including on critical infrastructure

The NBU notes that the following factors played a significant role in GDP growth:

• high adaptability of business and population;
• soft fiscal policy;
  
• stabilization of the energy situation since the second half of February, primarily due to rapid repairs and enhanced air defense;
  
• the efforts of the NBU and the government to maintain macro-financial stability in Ukraine.
  

"Taken together, this led to a significant slowdown in the economic decline in the first quarter, and in the second quarter, real GDP returned to growth, despite the negative impact of further destruction and business interruption during the air raids," the NBU said.

The NBU also emphasized that record budget spending on defense and security led to a further increase in the role of the public sector in the economy. Over the year, public sector consumption grew by 9%, and its share in GDP more than doubled in two years. The gross value added of the public administration and defense sector increased by more than 46% during this period, and its share increased from 6% in 2021 to 22% in 2023.

Recall

Ukraine's economy grew by 5.3% in 2023 year-on-year after a recession a year earlier and despite Russia's war against Ukraine.