In 2022, Ukraine will lose more than a third of GDP

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Ukraine will lose over a third of GDP
nonenews
12:23, 05.08.2022

In 2022, Ukraine will inevitably lose about 35% of GDP, and inflation will be at least 30%.



This is stated in the report of the National Bank of Ukraine.

The NBU also reports that economic growth will resume in 2023, but subject to the end of hostilities in the next six months.

The NBU reports that the hostilities and the consequences to which they led provoked a drop in Ukraine's GDP (year-on-year) by 15.1% in the 1st quarter and by 40% in the 2nd quarter.

Inflation has already exceeded 20% in six months. The NBU expected such an increase in consumer prices for 2022 as a whole.

The national currency is under serious devaluation pressure. Despite the fact that the NBU has raised the discount rate to 25%, it is taking quite strict measures in the form of various restrictions and is spending its gold and foreign exchange reserves to support the hryvnia (in June, the volume of gold reserves fell below $23 billion for the first time since November 2019).

There are a lot of problems with the financing of the state budget. Reducing the volume of foreign trade (according to customs data, over the first half of the year, external trade decreased by 27% year-on-year), occupation of territories and stagnation in key export industries (metallurgy, agro-industrial complex) led to a drop in state budget revenues.

Therefore, the NBU is forced to cover the deficit by issuing government bonds. And the longer the hostilities drag on, the higher the risk of unbalancing public finances and the threat of Ukraine's default.

According to the results of the NBU report, it is clear that the economy of Ukraine in any case in 2022 will be reduced by more than a third. This is only a preliminary and rather rough estimate. At the same time, the National Bank does not rule out that if the conflict subsides in 2022, Ukraine will receive the same "Marshall Plan", which will become a catalyst for economic growth.

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Artur Zayonts

Artur Zayonts specialises in news from the frontline. A historian by education, Arthur has always sought to bring depth and context to his journalistic work.