The motherland monument in Ukraine

Ukraine GDP Q3 2022

Ukraine: War-hit economy shrinks at a milder pace in Q3

According to a preliminary reading, GDP slid at a slower rate of 30.8% year on year in the third quarter, an improvement from the 37.2% contraction tallied in the second quarter.

Although a comprehensive sector-by-sector breakdown has not yet been released, the downturn will likely have been broad-based as a direct consequence of the full-scale invasion by Russia. Nevertheless, the launch of the Black Sea Grain Initiative on 22 July and the resumption of Ukrainian agricultural exports will have prevented a deeper slump.

Meanwhile, on a seasonally adjusted quarter-on-quarter basis, economic activity bounced back, growing 9.0% in Q3, contrasting the previous period’s 19.1% contraction.

In the last quarter of 2022, economic activity likely deteriorated sharply due to continuous air strikes on critical infrastructure and, particularly, damage to the energy grid. The Ministry of Economy estimated that the overall drop in GDP in 2022 was 30.4%. This was, nevertheless, an improvement from previous official projections given the strength of the country’s military defense, the speed of restoration of critical infrastructure and international financial aid.

In line with these estimates, 2022 would have seen a 30.4% drop in GDP—plus or minus 2%—which contrasted earlier expectations by the National Bank of Ukraine of minus 31.5% and FocusEconomics’ December Consensus Forecast of minus 33.4%.

The outlook ahead remains uncertain and contingent on the progression of the war. Current projections see the economy bouncing back in 2023, with the absence of a further security deterioration and ample foreign aid being key elements to recovery. In addition, rebuilding plans have been pushed back to H2 2023, which will likely continue to dampen growth prospects in the near term.

Analysts at the EIU commented:

“We expect a shallow recovery of 2.0% in 2023, primarily driven by financial support and a base effect. However, there is significant uncertainty attached to our forecast and the risk of a further contraction in 2023. Damage to critical infrastructure will hamper economic rebound even if areas that are relatively less affected by fighting. […] We do not forecast a recovery in private investment, as business sentiment among domestic and foreign firms will remain depressed, and economic activity will be driven mostly by fiscal expenditure, including on critical infrastructure repairs and social payments.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest