IMF slightly improves Ukraine's GDP growth forecast

The IMF said this in a press release following the sixth review of the Extended Fund Facility (EFF) Arrangement for Ukraine, according to Ukrinform.

“The economy has continued to show resilience despite the devastating challenges arising from Russia’s war in Ukraine, which has now lasted 1,000 days. Real GDP growth is expected at 4 percent in 2024, but a slowdown to 2.5-3.5 percent is forecast for 2025, reflecting headwinds from energy infrastructure damage and labor shortages,” the statement said.

The updated figures are more optimistic for Ukraine, in particular, given the expected results for this year. In its latest World Economic Outlook (WEO) report, the IMF predicted maximum growth for Ukraine in 2024 at 3% and in 2025 at no higher than 2.5%.

At the same time, the new analysis notes that as expected, inflation has picked up, reaching 9.7 percent y/y in October, mainly due to strengthening food and labor costs, but inflation expectations remain well anchored.

Gross international reserves amounted to $36.6 billion at end-October 2024, supported by continued large external official support.

“However, risks remain exceptionally high given uncertainty on the intensity and duration of the war, including from the continued attacks on energy infrastructure,” the IMF said.

The IMF also acknowledged that the 2024 supplementary and 2025 budgets are in line with program parameters. The 2025 budget deficit is expected to reach 19 percent of GDP, reflecting continued spending needs due to the ongoing war.