Ukraine's economic resilience shines despite wartime challenges
Two years after the Russian invasion, Ukraine's economy remains resilient. Despite Russian attacks on Ukrainian infrastructure, Ukraine is likely to record real economic growth of around 3% this year, the British Ministry of Defense assessed.
In a daily intelligence update, it was noted that this would continue the trend of recovery. After a GDP drop of 29% in 2022, Ukraine's economic growth amounted to 5% last year, according to the International Monetary Fund.
Better inflation forecasts from the National Bank of Ukraine (NBU) were also mentioned. Inflation is expected to be 8.2% in 2024 instead of the previously predicted 8.6%. The annual inflation rate in Ukraine fell to 3.2% in March, reinforcing the trend of decreasing inflation from a peak of 26% in 2022.
Inflation will become a problem
However, it was noted that inflation is likely to rise in the second half of this year. The NBU predicts a weakening effect of last year's good harvests, ongoing recovery in consumption, and increasing wartime costs for businesses.
"Sustained progress in Ukraine's economic situation has almost certainly allowed the NBU to lower the base interest rate gradually," the report said.
The NBU lowered the base interest rate to 13.5% in April 2024 from 14.5% in March 2024, well below the wartime peak of 25%.
