Investment in Ukraine
GDP declines at a quicker pace in the fourth quarter
According to a preliminary estimate, GDP contracted at a steeper pace of 31.4% year on year in the fourth quarter, below the 30.8% contraction seen in the third quarter.
Although a sector-by-sector breakdown was not released, economic activity will have deteriorated due to continuous air strikes on critical infrastructure and, particularly, damage to the energy grid.
On a seasonally adjusted quarter-on-quarter basis, economic activity declined 4.7% in Q4, contrasting with the previous period’s 9.0% growth.
The outlook for the year ahead remains highly volatile and contingent on the course of the war. Current projections see the economy bouncing back in 2023, in the absence of an escalation of military attacks on critical infrastructure. Ample foreign aid will continue to play a key role in keeping the economy going.
Andrew Matheny and Tadas Gedminas, analysts at Goldman Sachs, commented on the outlook:
“In our view, a ‘V-shaped’ recovery is feasible only if there is a firm resolution to the conflict that provides some security guarantees for Ukraine and thereby limits risks of re-escalation. While many international donors have expressed willingness to support rebuilding of the post-war Ukraine and there are ongoing discussions about possible recovery plans, the timetable for this to commence has been pushed back and it is difficult to imagine significant FDI inflows, especially private, unless there is clarity that the risks of military escalation are low.”
Ukraine Investment Chart
Ukraine Investment Data
|Fixed Investment (ann. var. %)||16.1||16.6||11.7||-21.3||9.3|