Even in the conditions of a full-scale war, the Ukrainian economy has demonstrated resilience and a high level of adaptability. As a result of 2022, GDP decline will not exceed 32%. This forecast was voiced by First Deputy Prime Minister – Minister of Economy of Ukraine Yuliia Svyrydenko in an interview with Forbes.
“Given the very positive results of the third quarter, we believed that the annual decline would not exceed 30%. Although at the beginning of the war we did not rule out a bigger drop – up to 45%. Due to the massive shelling that began in October, we have revised our forecast and believe that GDP will decline by 32% this year. Another aspect is that shelling, blackouts and switching to generators lead to higher production costs. This affects the price of goods and can add 1-2 percentage points to inflation in the first quarter of 2023,” said Yuliia Svyrydenko.
The Minister of Economy stressed that in the context of terrorist attacks of the russian federation on the energy system of Ukraine, one of the priorities of the Government is to mitigate consequences of this pressure on the economy. The state is ready for any developments and has taken a number of decisions and steps to support business in these conditions.
“The main threat from blackout is the narrowing of goods supply. The main tool of the Government to expand the supply is providing access to credit money for businesses through the 5-7-9% loan program. In addition, we need to keep banks, grocery stores and gas stations open. We have identified ‘backbone networks’ that should work even in a complete blackout, i.e. have generators and (if possible) Starlink. If we talk about this particular category of business, among the largest gas station networks about 90% of stations are already equipped with generators, grocery stores – at a rate of 50-60%. The Government has recently abolished tax payments in order to speed up supply of generators and Starlink and reduce the cost of this equipment for businesses. Since November 11, when this decision was made, 289,500 generators have been imported to Ukraine (269,500 – by legal entities, 20,000 – by individuals). This is more than in the last five years combined,” the Minister said.
As for economic forecasts for 2023, they are based on assumed developments at the front. In particular, the forecast, which provides for 3.2% GDP growth in 2023, is based on the assumption that the war ends with Ukraine’s victory in the middle of the year. According to Yuliia Svyrydenko, there are currently two alternative scenarios related to the shelling of energy infrastructure.
“According to them, in 2023 we will still reach the trajectory of recovery growth, but it will be smaller. Approximately from 1% to 1.5%. But so far we see no reason to switch to any of these alternative scenarios,” the Minister added.