Ukraine's economy under the influence of war: factors of recovery according to the IMF

The conditions of war in Ukraine create a challenging environment for forecasting the country's economic development, with dependence on many factors making forecasts extremely difficult. Alfred Kammer, Director of the European Department of the International Monetary Fund (IMF), shared his thoughts on what factors influence Ukraine's economic performance.

Mr. Kammer noted that in the short term, economic progress depends on macroeconomic stability based on the recovery of businesses and measures to support them.

In the medium term, economic growth also depends on solving the problem of refugees and displaced persons.

"So the medium-term perspective depends to a large extent on how the situation develops during the war," Kammer emphasized.

The Director of the IMF's European Department emphasized that after a sharp decline in the Ukrainian economy last year, there was a gradual increase in economic activity. The details of the indicators and growth rates will be determined during the second review of the IMF Extended Fund Facility program in Ukraine.

An important aspect is the positive inflow of donor funds to Ukraine. And the IMF recommends that all these funds should be directed to the state budget and subject to the control of the Ministry of Finance. This will help to ensure transparency, good governance, and informed decision-making.

According to the Ministry of Economy, Ukraine's gross domestic product declined by 29.2% in 2022.

When approving the Extended Fund Facility in March this year, the IMF initially envisaged a range of GDP growth in 2023 from -3% to +1%. However, the IMF later recognized the resilience of the Ukrainian economy amid the challenges of the war and the energy crisis and raised its growth forecast to between 1% and 3%.

The Minister of Economy of Ukraine Yulia Svyrydenko also expressed the opinion that GDP growth at the end of the year would be about 4%. As of January-September 2023, growth is estimated at 5.3%.