16:33 28.01.2023

Economy Ministry, unlike NBU, maintains 3.2% forecast for GDP growth in 2023

3 min read
Economy Ministry, unlike NBU, maintains 3.2% forecast for GDP growth in 2023

The Ministry of Economy confirms the forecast for the growth of the Ukrainian economy in 2023 by 3.2%, despite the worsening of its forecast by the National Bank of Ukraine (NBU) from 4% to 0.3% this week, First Deputy Minister Denys Kudin has said.

"Our forecast is 3.2% growth in 2023, so far we are not adjusting it," he said during an additional Q&A session at the annual Ukraine Economic Outlook conference.

Kudin explained that the business managed, better than expected, to adapt to the new conditions of power outages caused by Russian shelling, for example, if the Ministry of Economy initially predicted a decline in GDP in December by 37%, now it is estimated at 35%.

According to him, the ministry, together with Ukrenergo and regional power companies, managed to directly provide relatively acceptable working conditions for about 1,000 large industrial consumers, taking into account their underload and readiness to change work schedules, including night shifts.

"Therefore, we do not worsen our forecast due to energy," Kudin said, but added that the risk of blackouts remains among the main risks in 2023.

He also indicated that he considers the government's improved inflation forecast for 2023 from 20.8% to 18.7% to be optimistic, while the state budget was adopted on the basis of a 28% forecast, and in the Memorandum with the IMF, inflation this year was estimated at 22.5%.

"This is an optimistic figure, I would like it to be so," Kudin commented on the new inflation forecast from the National Bank.

At the same time, he added that there are grounds for lower inflation forecasts than expected in the autumn, in particular, a decline in world gas prices from $1,300 per 1,000 cubic meters to $900 per 1,000 cubic meters.

The representative of the Ministry of Economy drew attention to the fact that in the context of the war in 2022, a rather large regional disproportion in consumer prices appeared in Ukraine. According to him, if earlier most companies considered Ukraine to be one market, now, due to military risk, prices are much higher in the frontline regions, products are cheaper in the center, while in western Ukraine, due to an increase in the number of consumers, prices are again higher.

Kudin also noted that he considers the National Bank's view of the balance of payments to be too pessimistic. "The NBU has more tools to correctly predict this indicator, but, according to our estimates, it is different. We will close January soon and we will see the results," the First Deputy Economy Minister said.

In his opinion, the outflow of funds from Ukraine using payment cards in 2023 may be reduced by 2-3 times due to the reduction in savings of Ukrainian citizens who left the country, while the picture is different in terms of receipts to Ukraine and they can reach traditional $1 billion per month.

Answering a question about the dynamics of the hryvnia exchange rate, Kudin suggested that there could be some devaluation, and he believes that the National Bank also included it in its forecast.

"I would not consider the revaluation option especially. We believe that the main trend will be devaluation, but soft, gradual, non-critical and one that will generally correspond to the internal situation," he said, expressing confidence that the National Bank would maintain the situation on the foreign exchange market under control and will continue the policy of a fixed exchange rate.