Ukraine puts in first GDP growth since the war began

Ukraine puts in first GDP growth since the war began
Ukraine's GDP expanded by 19.5% in 2Q23, the first positive growth since the war broke out last year. / bne IntelliNews
By bne IntelliNews September 24, 2023

Ukraine put in the first positive growth of 19.5% year on year in the second quarter of this year, bouncing back into positive territory on low base effects, Ukrstat reported on September 22. (chart)

Ukraine’s economy experienced a deep collapse after Russia’s invasion in February 2022, with the peak contraction of -37.2% y/y in the second quarter of last year. That was worse than the peak contraction of -17% recorded in the second quarter of 2015 following the start of the Euromaidan revolution.

Taking seasonal factors into account, the GDP for the second quarter of 2023 experienced an uptick, growing by 0.8% compared to the previous quarter.

Over the course of the past year Ukraine's GDP has faced significant challenges, culminating in a 29.1% overall contraction, according to data from the State Statistics Service.

In a separate development the National Bank of Ukraine adjusted its GDP growth forecast for the nation in 2023, upgrading it from 2% to a more optimistic 2.9%. However, for the year 2024, the growth forecast was slightly revised downward from 4.3% to 3.5%. The NBU anticipates second-quarter growth in 2023 of 18.1%.

The Ministry of Economy in Ukraine remains optimistic about the nation's economic prospects, forecasting a GDP growth rate of 4% for 2023 and a further acceleration to 5% in the subsequent year as the economy continues to stabilise and the war is largely contained in the east and south of the country.

Earlier, Ukrstat reported that Ukraine's economy grew by 8% in August y/y, also on low base effects. Nevertheless, GDP was more than 20% lower than 2021's level, according to the Institute of Economic Research (IER).

Other positive results included lower-than-expected inflation and a stronger than expected hryvnia in August.