The Fund’s updated forecast for real income growth remained largely unchanged at 2.5%.
Inflation in Ukraine in 2023 will decrease to 15.5%, while real income will increase by 1%. This is confirmed by the updated improved forecast, published by the International Monetary Fund (IMF) following the results of the first revision of the EFF Extended Financing Program.
The fund also upgraded its inflation expectations for 2024 to 10%, though the forecast for real income growth remained largely unchanged at 2.5%.
In its preliminary forecast at the end of March this year, the IMF predicted inflation for this year at 20% after 26.6% last year and real incomes falling another 2% after falling 21.1% last year .
According to representatives of the Fund, the reason for this is better than initially expected, the results of the first quarter and the increase in the assessment of the contribution of private consumption from 1.2% to 2.7% and public consumption from -0.2% to 0.7 %, as well as investment from 0.3% to 2.6% while maintaining the negative contribution of net exports of 4.1%.
At the same time, the IMF improved its expectations for nominal GDP growth this year from UAH 6.05 trillion to UAH 6.5 trillion, and next year from UAH 7.37 billion to UAH 7.71 billion, mainly due to the increase of nominal GDP estimates for the previous year. from UAH 4.9 trillion to UAH 5.19 trillion.
The updated macro forecast also reduced the unemployment forecast for this year from 20.9% to 19.4%, and next year from 11.9% to 10.6%.
According to the Fund’s new estimates, the growth of private savings this year will be 25.6%, investments – 12.2%, while earlier it was expected that they would be at the level of 31.8% and 15.8%, respectively.
The IMF significantly improved the forecast for the growth of public debt this year – from 98.3% of GDP to 88.1% of GDP, in particular, by changing its estimate at the end of last year from 81.7% of GDP to 78.5 % of GDP .
According to the updated macro forecast, public debt will continue to grow for another two years and will rise to 100.7% of GDP in 2025, while the original forecast assumed it would rise to 105% of GDP as early as of next year.
The IMF also worsened the current account deficit forecast for the balance of payments from 4.4% of GDP to 5.7% of GDP. However, the estimate of international reserves at the end of this year turned out better – $30.5 billion against $29.6 billion in the March document.
It will be recalled that in March the IMF executive board approved a $15.6 billion four-year financing package for Ukraine to help the country meet its urgent financial needs amid the war.
Source: korrespondent
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