Decrease in Inflation and Increase in GDP in Ukraine

by Meifan Honcharuk
Monday, May 8, 2023
Decrease in Inflation and Increase in GDP in Ukraine

Lucrative time for foreign investors to launch in Ukraine and for Ukrainians — to take advantage of state benefits for private business

The inflation report of the NBU for April 2023 confirms that inflation will decrease "over the entire forecast horizon". The start of improvements is expected already in the first half of the year, and due to the risk reduction included in the forecast, inflation will decrease in the following years: to 9.6% in 2024, to 6% in 2025.

"Inflation in Ukraine will slow down to 14.8% this year under the influence of tight monetary conditions, a decrease in world inflation and restrained domestic demand," National Bank of Ukraine.

In the second half of 2023, price increases for essential goods are not predicted, but the fuel tax will be returned, and the logistics and industrial sectors are expected to strengthen. All this together with a soft fiscal program will ease the pressure on the budget and help increase GDP by 2%. Despite the tight monetary policy.

Today, colossal funds are directed to maintaining the defence capability of our state. In addition, the budget is suffering due to the consequences of the war, due to which in 2023 its deficit will exceed 26%. In the future, it is predicted that the deficit will decrease primarily thanks to foreign investments and the state's stimulating policy to improve business conditions for citizens.

"At the same time, the role of borrowing on the domestic debt market will grow, including due to the increase in the attractiveness of government securities against the background of a decrease in the risk premium and inflation," NBU.

Thanks to this, the government and the Bank will not have to use monetary financing.

"Despite the high level of debt on the forecast horizon, the debt burden in the coming years will be relatively moderate thanks to preferential conditions for attracting new loans," NBU.

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