Impact of war duration on Ukraine's economy: World Bank forecast
Impact of war duration on Ukraine's economy (Photo: Getty Images)
The economic prospects of Ukraine depend on the timing and volume of external assistance inflows and the anticipated duration of the Russian invasion, according to the World Bank forecast for Europe and Central Asia countries.
According to an indicative scenario that assumes active combat will continue throughout 2024, GDP growth in 2024 is expected to be 3.2%. Starting in 2025, Ukraine's economic growth is projected to accelerate to 6.5%, which aligns with the base assumption as export growth and investment in recovery pick up.
Private consumption growth is expected to remain modest due to a restrained monetary policy necessary to curb post-war inflation.
Inflation is expected to rise in 2024 due to one-off factors but is forecasted to decline from 2025 onwards.
"This scenario is subject to significant downside risks due to the vulnerability of Ukraine's economic trajectory to external financing shortfalls and the possible prolongation of the active hostilities beyond 2024. Should downside risks materialize, a more stringent macroeconomic adjustment could become necessary. That adjustment could affect social spending and transfers to households that most of the poor have come to depend on, which could push many of them deeper into poverty," the overview states.
GDP growth forecasts for 2024
The Government of Ukraine has included a 4.6% GDP growth forecast in Ukraine's state budget for 2024.
According to the NBU forecast, real GDP will grow by 3.6% in 2024, primarily due to sustained high budget expenditures against the backdrop of expected international assistance levels being sufficient.
The IMF predicts that economic growth rates in Ukraine will decrease to 3-4% in 2024.
