Ukraine Economic Forecast

After Q2’s rebound, annual growth likely eased in Q3 from Q2: The Ministry of Economy estimated that GDP rose 5.3% in January–September year on year (H1: +4.5% yoy). The collapse of the Black Sea Grain Initiative in July denting export capacity and Russia’s subsequent attacks on port cities and infrastructure constrained activity. However, robust business confidence in the quarter and the start of monetary policy easing in July boded well for private-sector activity. In Q4, growth is likely remaining resilient due to lower interest rates, cooling inflation and the resumption of grain exports through alternative routes. In other news, Ukraine reached a staff-level agreement with the IMF in November, which would unlock a USD 900 million disbursement by year-end. Meanwhile, EU accession talks could begin as early as December, following a recommendation of the European Commission in November.

October saw inflation ease to 5.3% (September: 7.1%), marking a 34-month low. Inflationary pressures should slow next year from 2023’s average on a favorable base effect, subsiding supply shocks and lower commodity prices year on year. Stronger-than-expected wage growth, war-induced supply shocks and spikes in global commodity prices pose upside risks.