In 2024-2026, a moderate increase in inflation and recovery of the economy is expected – NBU
According to updated according to the forecast of the National Bank of Ukraine, inflation in Ukraine will slow down to 8.2% in 2024, and then decrease to 6% and 5% in the next two years.
The economy will also continue to recover, albeit at a slower pace than in 2022, due to significant disruptions in the energy sector. GDP growth is expected to be 3% in 2024, 5.3% in 2025 and 4.5% in 2026.
The National Bank says that after a sharp decline at the beginning of the year due to last year’s harvest and a mild winter, inflation will rise again in 2024. This will be influenced by pressure from business labor costs and rising consumer demand. Inflation is expected to reach 8.2% at the end of 2024, before falling to 6% and 5% in the following two years. The NBU will use monetary policy to contain inflation while maintaining support for economic recovery.
Also, Ukraine’s economy will continue to recover thanks to the adaptability of Ukrainian business and population, softer fiscal policy, growth in exports and household incomes. However, the negative impact of the war on economic activity remains significant. GDP growth is expected to be 3% in 2024, 5.3% in 2025 and 4.5% in 2026.
The NBU report says that demand for labor will continue to grow, while supply will remain limited due to migration, mobilization and changes in the structure of the economy. This will reduce the unemployment rate, which is expected to be 14.2% in 2024, 10-12% in 2025-2026. However, it will still exceed pre-war indicators. Wage growth will be stimulated by the revival of economic activity and competition for workers with employers abroad. The budget deficit is expected to be 20.7% of GDP in 2024, 13.5% in 2025 and 7.5% in 2026. International aid will remain an important source of deficit financing.
The volume of international reserves will fluctuate between 39-44 billion dollars. USA during 2024-2026 and will be sufficient to maintain the stability of the foreign exchange market.
Alternative scenario:
The forecast also includes an alternative scenario in which the war lasts longer and the economy recovers more slowly. In this case, GDP growth would be around 3% annually in 2024-2025, before accelerating to 5.6% in 2026. Inflation will slow down to 5.0-5.5% in 2025-2026.
