Interfax-Ukraine
15:47 14.04.2022

NBU expects real GDP to shrink by at least a third in 2022

2 min read
NBU expects real GDP to shrink by at least a third in 2022

The Ukrainian economy will gradually recover, but real GDP may decline by at least a third in 2022, the National Bank said on Thursday.

According to the report, GDP reduction is expected in all components. Thus, private consumption will decrease due to the forced departure of many citizens from the country, rising unemployment, reduced incomes and savings on secondary expenses. Due to significant uncertainty and high risks, investment activity will also significantly decrease, the NBU points out.

According to the regulator, the decline in consumption and investment could lead to a reduction in imports compared to the pre-war period. At the same time, the export of goods also suffers significant losses due to the shutdown of enterprises, a decrease in sown areas and the impossibility of effective agricultural work due to hostilities, the blockade of seaports, and problems with the supply of fuel and fertilizers.

In addition, an increase in stocks of products is expected, which enterprises will try to export later.

"After a significant reduction in the first month of the war, exports and imports will gradually resume," the report said.

Exports of goods fell sharply in March 2022 due to logistical disruptions and disruption of production capacity, while merchandise imports declined significantly as a result of lower domestic demand, logistical difficulties, and restricted imports of critical items.

At the same time, according to the expectations of the National Bank, due to the partial solution of problems with logistics, export volumes will gradually increase compared to March results.

The Central Bank predicts that imports of goods and services to Ukraine will increase at a moderate pace due to the gradual recovery of consumer and investment demand.

It is noted that the financial support of Ukraine's international partners will become a significant source of foreign exchange earnings in Ukraine. Other relatively stable sources will remain labor migrants' remittances and income from the IT industry.

In addition, it is indicated that business is gradually resuming its activities, overcoming the challenges of wartime. In particular, according to the results of unscheduled surveys conducted by the National Bank, the number of enterprises that completely ceased their activities decreased from 30% in the first weeks of March to 23% in early April.

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