The World Bank has improved its growth estimate for Ukraine’s Gross Domestic Product (GDP) in 2023 to 4.8% from 2% and predicts a slowdown in recovery to 3.2% in 2024, according to a new World Bank Group Flagship report released in Jan. 2024.

Ukraine’s economic prospects remain quite uncertain, though after a slowdown in 2024, growth is projected to improve to 6.5% by 2025.

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Active military actions are expected to continue throughout 2024, while base effects and one-time factors, including the harvest of agricultural crops, should weaken. The partial resolution of uncertainties in 2025 will contribute to the resumption of exports and a gradual increase in reconstruction investments, the Bank believes.

Despite growth last year, the real GDP volume achieved is approximately 30% lower than before Russia’s full-scale invasion. Growth was underpinned by improved electricity access, a better harvest, and additional government spending, albeit at the cost of increasing fiscal and current account deficits. While the unraveling of the Black Sea Grain Initiative in July 2023 continues to exert downward pressure on grain exports, Ukraine has successfully identified alternative routes for grain exports that have supported the sector.

For Russia, the World Bank forecasts a slowdown in GDP growth in 2024−2025 to 1.3% and 0.9% respectively, down from 2.6% in 2023.

Overall, growth in the Europe and Central Asia region will remain below pre-pandemic levels. This situation reflects the prolonged effects of the pandemic and Russia’s invasion of Ukraine: 2.4% this year compared to 2.7% in 2023, 1.2% in 2022, and 7.1% in 2021.

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Uncertainty surrounding the evolution of Russia’s invasion of Ukraine plays an important role in shaping the regional outlook. Excluding these two economies, growth in the region is expected to accelerate to 3.1% this year and to 3.7% in 2025.

Other geopolitical risks, such as tensions between Armenia and Azerbaijan and between Kosovo and Serbia, could resurface, and many presidential, parliamentary, and local elections in 2024 also increase uncertainty about future economic policy.

It was previously reported that World Bank research predicts the slowest global economic growth in recent decades. Obstacles to development include sharp interest rate hikes, an overall decline in trade, and increased geopolitical risks.

The pace of global economic growth will slow down to 2.4% by 2024, the Bank says, making the average growth rate for the five-year period from 2020 to 2024 at 2.2% – nearly the lowest since 1990−1994, when average growth was 2.1%.

Ukraine received $1.5 billion from the World Bank in July 2023.

The World Bank will provide Ukraine with a loan of $1.2 billion under guarantees from the Japanese government, NV reported on Dec. 1, 2023.

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The National Bank of Ukraine improved its GDP growth forecast for Ukraine in 2023 from 2.9% to 4.9%, and in 2024 from 3.5% to 3.6%, worsening it for 2025 from 6.8% to 6% at the end of Oct. 2023. 

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