British intelligence analyzes state of Ukraine, Russia economies amid war
The UK Ministry of Defense reported this on X, citing intelligence data, Ukrinform saw.
Intelligence experts note that the growth of the Ukrainian economy by 3% this year after a 29% drop in 2022 and real growth of 5% in 2023 points to a recovery trend.
They noted that the International Monetary Fund (IMF) foresees average annual inflation at 5.8% in 2024, which is lower than the peak of 20% in 2022.
“Defence spending is expected to account for approximately 60 per cent of Ukraine’s state expenditures in 2025,” the report said.
The UK MoD estimates that Russia’s economy is likely to grow by around 3.6% this year, continuing a growth trend since the initial economic shock of Russia’s full-scale invasion of Ukraine in 2022.
“This growth is highly likely being driven by government spending, particularly on the Military Industrial Complex,” analysts suggest.
However, Russia’s economic growth is projected to slow in 2025 due to pressures from inflation, labor shortages and sanctions, the intelligence report said.
The UK Ministry of Defense added that in 2025, Russian defense spending will increase further, accounting for 32% of total budget expenditure, while other areas of the budget, such as social spending, face cuts.
According to analysts, the increase in Russian government spending is likely to intensify existing inflationary pressures in the economy, with an annual average inflation rate of 7.9% forecast for 2024.
As Ukrinform reported earlier, on October 24, the head of the IMF's European Department, Alfred Kammer, said the IMF's latest outlook for Ukraine's economic growth in 2024-2025 had been significantly lowered, primarily due to Russia's destruction of Ukraine's energy infrastructure, as well as uncertainty about the further war developments.
In its latest World Economic Outlook (WEO) outlook, the International Monetary Fund downgraded its GDP growth outlook for Ukraine in 2024 from 3.2% (in the April outlook – ed.) to 3.0%. In addition, the Fund lowered its outlook for Ukraine’s GDP in 2025 from 6.5% in the April report to 2.5% in the current WEO.
