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Yulia Sviridenko: In 2024, the Ministry of Economy forecasts a GDP growth of 4.6% and a 29.6% increase in investments

13 Jan, 2024
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Yulia Sviridenko: In 2024, the Ministry of Economy forecasts a GDP growth of 4.6% and a 29.6% increase in investments

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The dynamics and changes in the GDP structure reflect how the economy is reshaping and adapting to wartime conditions. Currently, the Ukrainian economy is increasingly acquiring the characteristics of a wartime economy, with qualitative changes reflected in structural shifts and quantitative changes indicating business adaptation and a transition to a phase of recovery. As of the results of 2023, the Ministry of Economy estimates a GDP growth of 5%.

First Deputy Prime Minister of Ukraine and Minister of Economy Yulia Sviridenko stated this during an event dedicated to the overview of the Ukrainian economy in 2023, organized by the Center for Economic Strategy on January 11.

"Compared to the pre-war year 2021, the role of the state has increased: today, the leading role is played by the sector of general government management, which includes defense and security, social protection, and business support. According to the Ministry of Economy estimates for the first 9 months of 2023, the share of value-added of public administration in the GDP increased by 15 percentage points and amounted to 21.2% compared to 6.2% in 2021. Essentially, this sector ensures security and helps the economy adapt to new conditions," noted Yulia Sviridenko.

In addition, a priority of the wartime economy is the financing of investments in the defense industry and the restoration of destroyed infrastructure. Thus, compared to 2021, the share of gross accumulation of fixed capital in GDP increased by almost 4 percentage points to 17.1%, mainly due to budget financing.

"As a result, we see the accelerated development of the engineering complex, which is reoriented to the production of products for the defense industry and the production necessary for the reconstruction of the destroyed. Here, too, we observe a powerful structural shift in the industrial process in a relatively short time. In the first 9 months of 2023, the share of mechanical engineering in the structure of industrial product sales increased by 1.1 percentage points to 6.8%, compared to 2021," emphasized the First Deputy Prime Minister of Ukraine.

At the same time, the Ministry of Economy observes a shift in consumption priorities, including a decline in household consumption, which is characteristic of a wartime economy. During the reporting period, the share of final consumer expenditure of households in GDP decreased by almost 2 percentage points to 66.3%. This is also a consequence of Ukrainians leaving the country, which, among other things, affected the shift in the distribution of imports of goods and services towards an increase in the latter in the total import volume.

The armed aggression of the Russian Federation has caused significant losses in sectors that previously held leading positions. For example, the metallurgical industry, due to significant destruction of enterprises, their temporary occupation, and blocked logistics, is currently among the outsiders. In the first 9 months of 2023, the share of metallurgical production in the structure of industrial product sales decreased by 7.9 percentage points compared to 2021 and amounted to 9.9%.

"We see how leaders in production are changing, and some sectors are more flexibly adapting to the challenges of war. The role of the state here is to support business development and prevent the loss of existing capacities. For this, we are working on the most acceptable logistics, diplomatically trying to resolve issues with export restrictions, continuing business support programs, including the 5-7-9 affordable lending program, grant support for starting and developing one's own business, increasing the level of production localization, and more," added Yulia Sviridenko.

As the First Deputy Prime Minister of Ukraine noted, the forecasting process is carried out in real-time conditions with a high degree of uncertainty. Thus, in 2024, GDP growth is forecasted to be 4.6%. Investments in 2024 compared to 2023 will increase by 29.6%, forming the largest positive contribution among components to GDP growth. Private consumption is in second place. Further gradual recovery of domestic production is also expected, primarily satisfying the needs of investment demand. The growth of the value of exports of goods and services in 2024 is expected to be 9.0%, and the import of goods and services - 5.9%.

The Odessa Journal

The Odessa Journal

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