After Ukraine succeeded in establishing a sustainable grain corridor, economists’ attention was drawn to energy shortages after Russia repeatedly attacked the electrical infrastructure and power grid.

The real GDP growth rate slowed to 3.8 percent year-on-year due to “significant damage caused by Russian attacks on electricity generation.”

This conclusion was offered by Oleksandra Betliy, an analyst at The Institute for Economic Research and Policy Consulting (IER), during a macroeconomic forecast presentation put on by the Center of Economic Strategy (CES).

This isn’t the only organization decreasing its growth forecast for this year. Ukraine’s National Bank decreased its GDP forecast for 2024 from 3.6 percent to 3 percent in its Financial Stability report for the first half of 2023.


Yuliia Svyrydenko, Ukraine’s Economic Minister, also pointed to the slowdown due to Russian attacks, according to her Facebook post.

Businesses also suffer from the lack of workforce personnel, and war-related risks that are limiting investment and negatively impacting business sentiment.

However, the energy deficit became the main factor after Russia attacked power generation facilities this year. In contrast, during the blackouts of 2023, Russia struck transmission facilities and substations rather than the power plants themselves.

“The growth in this year and the next year will strongly depend on how Ukraine can efficiently ensure power generation. We are talking about modular stations, gas installations, renewable energy,” Betliy said during an online macroeconomic forecast event.

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Apart from IER, the decrease was also predicted by leading Ukraine’s think tanks and investment banks who presented their forecast.


Consensus forecast by leading Ukraine’s think tanks and investment banks. Source: Centre of Economic Strategy.

Analysts include representatives from Ukraine’s investment companies Concorde Capital, Dragon Capital, ICU, and the think tanks Institute of Economic Research and Policy Consulting (IER), Oxford Economics, Vienna Institute for International Economic Studies (WIIW), and Forbes Research.

The real GDP growth for 2024 has varied from 2.6 to 4 percent, while 2025 forecasts show from 3.5 to 5.1 percent GDP growth, according to analysts’ estimates published by CES.

Average inflation for 2024 should be no more than 6.4 percent in 2024, reaching a maximum of 9.5 percent at the end of the year. However, some analysts believe it may be lower.

Forecast of inflation for the end of 2024. Source: Centre of Economic Strategy.

Both average and year end inflation may increase in 2025, with a maximum forecast of 10.6 percent on average, reducing 10 percent by the end of the year.


The National Bank has exhausted the softening of monetary policy, said Vitaliy Vavryshchuk, Head of Macroeconomic Research at ICU Group. For the next 12-18 months from the summer of 2024, the National Bank is unlikely to decrease the key interest rate by more than half a percent. The current key rate is 13 percent, as of June 2024.

The budget gap is $53 billion for 2024, according to Dragon Capital’s forecast. It is lower than in 2023, thanks to Hryvna devaluation, Head of Research at Dragon Capital Olena Bilan noted.

The Hryvna depreciated from Hr.36.6 to approximately Hr.40 per US dollar during 2024.

Other factors that made the budget gap rise include increasing budget income, especially from the windfall tax on the bank’s record profits at the end of 2023, according to Bilan.

But Deputy National Bank Head Serhii Nikolaychuk is reasonably sure the gap will be covered by foreign aid.

“It’s a realistic [prognosis], taking into account the $38 billion of international aid in 2024, and the capacities of the internal market to fund the budget gap – the success demonstrated by the Ministry of Finance with the support of the National Bank,” Nikolaychuk said during the CES forecast presentation.


Consensus forecast of budget gap, financing needs, and foreign aid in 2024, according to Ukraine’s leading analysts. Source: Center of Economic Strategy.

Despite the anxious war situation and challenges for Ukraine’s economy, the National Bank is calm about its reserves forecast. “We’ll have a buffer to ensure the stability of the currency market,” Nikolaychuk said.

Currently, Ukraine’s central bank reserves are estimated to be from $40 to $45 billion, according to economic analysts.

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