NBU upgrades Ukraine’s economic growth forecast for 2024 to 3.7%

Despite an electricity deficit in Ukraine’s energy system and smaller harvests compared to the previous year, the National Bank of Ukraine (NBU) has slightly upgraded the country’s economic growth forecast for 2024 to 3.7%.

The relevant statement was made by NBU Governor Andriy Pyshnyy at a briefing, an Ukrinform correspondent reports.

“Despite power shortages and smaller harvests compared to a year ago, the NBU has even slightly upgraded its economic growth forecast for this year, to 3.7%. This was made possible by better Q1 results and an anticipated expansion of fiscal stimulus, as well as by the development of distributed generation with support from large-scale lending programs,” Pyshnyy noted.

In his words, the gradual normalization of economic activity and the steady pursuit of loose fiscal policy along with the development of export routes and the revival of external demand will help speed up real GDP growth to 4-5% in 2025-2026.

Under the forecast’s baseline scenario, Ukraine will keep receiving substantial external financing inflows. However, they will slowly decline with the growth in Ukraine’s internal capacity to cover budget expenditures with domestic resources.

The NBU expects international partners to provide about USD 38 billion in soft loans and grants to Ukraine in 2024, and no less than USD 31 billion next year.

Such volumes of external inflows, together with growing domestic borrowing, will allow Ukraine to cover a significant budget deficit of about 23% of GDP in 2024 and 18% in 2025.

A reminder that, as of early July 2024, the Ukrainian Economy Ministry expected the real GDP growth rate to be around 3.5%

Photo: NBU