Economy

The Ukraine’s economy will shrink by almost 32% in 2022



(Stocksak). – Ukraine’s economy is expected to shrink by 32% this year, and the annual inflation rate will rise to 30% due to Russia’s invasion damage, the Ukrainian central banking said on Thursday.

In a quarterly inflation report, they stated that gross domestic product would grow by around 4 to 5% per annum if security threats decline and demand picks back up.

It stated that this year’s economic downturn was caused by lower domestic demand, disrupted logistical systems, large losses of labor force, and potential for production caused by war.

“Fiscal policy has been unprecedentedly accommodating and will continue to be so until 2024. This will support the economy in wartime and, together with the easing the security risks, will contribute to economic recovery.

According to the bank, inflation, which is currently at nearly 25%, should fall to 21% next year and drop below 10% by 2024.

It said that international financing will be the primary source of funding the budget deficit. It will gradually decline from 25% GDP in 2022 to 12% by 2024.

The key risk in the forecast is the possibility that the war might last longer than predicted. An alternative scenario assumes that security risks will not end until mid-2024. In this scenario, GDP growth would be between 2% and 3% per annum in 2023-2024.

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