This is reported by RBK-Ukraine referring to the Memorandum with the IMF. Information is also provided by Kontakty.UA.
"The scenario still assumes that the war will end by the end of 2025, and the assumptions regarding the development of the energy sector and key political objectives will remain unchanged," the document states.
In particular, the baseline scenario includes:
- The real GDP growth of Ukraine in 2024 is projected to be 4%. This is 1 percentage point higher than the IMF's forecast from October.
- The economic impact of the winter energy deficit may be more limited than previously anticipated (despite recent attacks), due to business investments in their own generation capacities, increased import potential from Europe, and efforts to repair and install additional generation capacities and distribution.
- The inflation forecast for the end of the year has been raised by 1 percentage point to 10%, mainly due to ongoing pressure from rising prices for raw products, which have also affected essential food-related goods, as well as the spillover effects of wage increases and energy costs.
The revision of the baseline scenario for 2025 is minor compared to October.
The forecast for real GDP growth remains unchanged at 2.5-3.5%, as the higher potential from faster energy capacity repairs in 2024 and new capacities in 2025 will be offset by the effects of a tighter labor market, supporting stronger income and consumption growth against a backdrop of easing price pressure in the second half of the year.
The average inflation rate has been revised upward by 1.3 percentage points to 10.3%. It is expected that the mostly temporary inflationary pressure will ease, leading to an end-of-year inflation rate of 7%.
In the medium term, forecasts for key economic variables have changed little. According to recovery expectations, real GDP growth will increase in the years immediately following the war before gradually approaching its potential of 4%; inflation is expected to gradually reach the NBU's target level of 5% by 2027 as the volatility of war-related inflation decreases.
Recall that in October 2024, IMF experts updated their forecast for the duration of the war between Russia and Ukraine, extending the timeline by a year. In the baseline scenario, the war is expected to end at the end of 2025. In June, the IMF projected in its baseline scenario that the war would conclude by the end of 2024, while the conclusion of the war by the end of 2025 was included in the fund's negative forecast.