The International Monetary Fund (IMF) has downgraded its forecast for Ukraine's economic growth for 2024 and 2025 due to the impacts of Russian attacks on its energy infrastructure.
According to an IMF Memorandum, the IMF now expects Ukraine's GDP to grow by 2.5-3.5% in 2024, down from the 3-4% growth forecasted in March. The forecast for 2025 has been lowered to 5% from 5.5%.
The Memorandum notes that in the first quarter of 2024, Ukraine's economy showed more resilience than expected, with stable growth indicators, ongoing deflation, and adequate reserves.
"Recovery is expected to slow down, especially considering the attacks on Ukraine's energy infrastructure, and the outlook is subject to high risks due to exceptionally high uncertainty related to the war. Vigilance regarding these risks is necessary to ensure timely responses in case of shocks," stated IMF Managing Director Kristalina Georgieva.
The Memorandum indicates that the outlook for the remainder of 2024 and into 2025 has worsened primarily due to the destructive attacks on Ukraine's energy infrastructure and uncertainty about the duration of Russia's war against Ukraine.
"The risks of deterioration remain exceptionally high due to the war-related uncertainty, potential cost and financing shocks, and the social impacts of policies that may be necessary if shocks materialize," the document states.
According to the State Statistics Service, Ukraine's GDP growth in 2023 was 5.3% after a 28.8% decline in 2022. In the first quarter of 2024, growth unexpectedly accelerated to 6.1%.
