EBRD updates Ukraine's economic growth forecast for 2024-2025
The EBRD has updated its forecast for Ukraine's economy (ebrd.com)
The European Bank for Reconstruction and Development (EBRD) has maintained its forecast for Ukraine's economic growth in 2024 at 3.0%. However, the 2025 forecast has been downgraded from 6.0% to 4.7%, citing the EBRD forecast.
The report says that a new wave of severe damage to electricity generation and transmission infrastructure amid the war in Ukraine has interrupted four consecutive quarters of sustained GDP growth. The economy grew by approximately 6.5% year-on-year in the first quarter of 2024 but then slowed due to energy shortages and higher prices for imported electricity.
Inflation stabilized below the 5% target in the first half of the year, before reaching 5.8% in July 2024. As a result, the central bank halted monetary easing after seven consecutive interest rate cuts from July 2023 to June 2024, during which the rate was reduced from 25% to 13%, according to the EBRD.
"The short-term growth outlook remains highly uncertain. Improved export prospects, bolstered by the Black Sea corridor along the coast, could be offset by electricity shortages," the forecast says.
Additionally, the labor shortage remains acute, and the risk of further destruction of infrastructure and production facilities persists.
Ukraine’s economic growth
According to the State Statistics Service, Ukraine's GDP grew by 6.5% in the first quarter of 2024. Growth slowed to 3.7% in the second quarter.
International financial organizations, experts, the Ukrainian government, and the National Bank of Ukraine forecast economic growth in 2024 to be around 3%.
