The growth of the Ukrainian economy by the end of 2023 could exceed 5% thanks to larger-than-expected receipts of international financial assistance, a good harvest, the absence of interruptions in the energy system, a new sea corridor and the adaptability of entrepreneurs, Deputy Governor of the National Bank of Ukraine (NBU) Serhiy Nikolaychuk has said.

"Considering that the third quarter was a little better than we expected in October, and in the fourth quarter we see better results, in particular in the field of logistics of our export products, it is highly likely that our result for 2023 will be better than 4.9%, which we predicted in October," Nikolaychuk said in an interview with Interfax-Ukraine.

Regarding the possibility of revising the macro forecast for 2024, the deputy governor of the National Bank indicated that the regulator in January would reassess various risks and factors, including the impact of mobilization on the expectations of the population and business.

"But I would not expect a significant change in this forecast. So, on the one hand, the economy performed better in 2023 and generates additional impetus for 2024. But at the same time, for example, the high harvest last year increases the comparison base for harvest and, accordingly, GDP this year," Nikolaychuk said.

According to him, the upward revision of the forecast may be influenced by the work of the new sea corridor, which improves the economic activity of export-oriented industries and reduces the electricity shortage.

Speaking about negative risks, Nikolaychuk emphasized that the main thing remains the continuation of military operations, as well as the rhythm and sufficiency of the volume of international assistance.

"We, in fact, have already realized the risk of irregularity in the receipt of funds from international partners. So far, our base scenario provides that in 2024 we will be able to receive $38 billion from partners. But compared to October, the risks regarding the rhythm and volume of receipt of this amount are higher," he noted.

Nikolaychuk informed that expectations for 2025 are radically different from 2024, since how the economy will behave during the post-war recovery period remains somewhat of a mystery for the regulator.

"At the same time, we need to understand how we can conduct macroeconomic financial policy in these conditions. Actually, for these purposes, we are developing a scenario with the assumption of a significant reduction in security risks and have in stock a certain scenario for the corresponding adjustment of our policies," he said.

Commenting, at the agency's request, on the negative scenario of colleagues from the International Monetary Fund (IMF), according to which if the war with the Russian Federation continues in 2025, Ukraine's GDP will decrease by 5% in 2024, the deputy governor of the National Bank expressed the opinion that only the risk of further prolongation of the war would not lead to such a deterioration in the economic situation.

"Their assessment of the decline in the economy in a negative scenario, in my opinion, should provide for the realization of slightly different risks. Because we see that in 2023 the war lasted all year, our assumptions about the duration of hostilities also worsened, but at the same time we improved economic activity indicators throughout the year," he explained.

In his opinion, in the case of "a longer duration of high security risks," the impact on the economy can be compensated by greater support from international partners and higher adaptability of Ukrainian society to military conditions.

Answering the question about the feasibility and reliability of forecasts for 2025 and subsequent years, Nikolaychuk explained that in this process the National Bank sets the task of predicting post-war recovery.

"Our (forecast for) the 2025 year is radically different in its assumptions from the 2024 year, because this is the year of post-war reconstruction, a year with significantly lower security risks. Is it necessary to predict this post-war recovery now, when the time of the end of the war is unclear? The question is quite non-trivial," the deputy governor of the NBU said.

He noted that it has become much easier for the National Bank to predict how the economy will behave under a certain status quo, when security risks remain quite high and a significant part of budget needs is financed by international partners.

"How the economy will behave in the post-war environment remains a certain terra incognita for us," Nikolaychuk stated.

At the same time, he emphasized the need to understand how to conduct macroeconomic financial policies in the context of post-war reconstruction.

"Actually, for these purposes, we are developing a scenario with the assumption of a significant reduction in security risks and have in stock a certain scenario for the corresponding correction of our policies. But it is clear that as we approach this situation, we will calibrate our policies accordingly so that they best meet the new conditions that we really count on and hope for," the deputy governor of the National Bank summed up.