National Bank of Ukraine forecasts a decrease in inflation and economy return to growth in 2023

National Bank of Ukraine forecasts a decrease in inflation and economy return to growth in 2023

The consequences of the full-scale russian invasion are causing significant losses to the economy of Ukraine and generating a strong inflationary pressure. As a result, in 2022, inflation will slightly exceed 30%, and GDP will decrease by a third. In Q3 2022 Inflation Report, NBU expects a decrease in inflation dynamics and the return of the economy to growth in 2023.


By the end of 2022, inflation will accelerate and reach 31%, given the persistence of most supply shocks impact. It refers, in particular, to the consequences of military actions and high energy costs.

In Q1 2023, inflation is expected to slow down due to expectations improvement, logistics enhancement and gradual harvests growth. The decrease in global inflation and NBU tight monetary policy will have further disinflationary effect. Instead, high energy cost and the need to gradually increase energy tariffs for the population to market levels will restrain the slowdown of inflation. As a result, consumer inflation will decline to nearly 20% in 2023 and slow down to single-digit levels only at the end of 2024.


The consequences of the war will lead to a significant economic decline in Ukraine in 2022, but in 2023 the economy will return to growth. Economic activity has picked up since April, primarily due to the liberation of the northern regions and a reduction in the number of regions with active hostilities. But the economy is working at a much lower capacity as compared to pre-war level. As a result, real GDP will contract by a third in 2022. In 2023, provided that security risks are reduced, the economy is expected to return to growth due to the revival of consumer demand, the establishment of technological and logistics processes, and the recovery of investment activities, in particular due to the prospects of European integration. At the same time, significant losses of production and human potential will hold back the recovery of the economy. In 2023-2024, GDP will grow at a rate of nearly 5-6% per year.

Labour market

Labour market activity is gradually recovering after the halt at the start of the war. At the same time, labour supply significantly exceeds labour demand. This leads to a high level of unemployment and a decrease in wages. In the future, unemployment will gradually decrease, but will remain above its natural level due to the long-term effects of the war. With economy recovering and labor demand picking up, nominal wages are expected to rise rapidly and surpass pre-war levels as early as 2023. However, taking into account inflationary processes, real wages at the end of 2024 will still be lower comparing to the pre-war level.

Key assumptions

The main assumption of the forecast is a significant reduction of security risks by the end of the current year due to the successful actions of the Ukrainian army. The NBU forecast also assumes the full operation of Black Sea ports of Ukraine from the beginning of 2023. In addition, the continuation of active international financial support for Ukraine to finance budget needs and filling balance of payments gaps is expected, in particular, the successful implementation of a new IMF program during 2023-2024.

At the same time, Ukraine’s Recovery Plan (so called “Marshall Plan”) – is not taken into account in the current base scenario, since its parameters and terms of implementation have not yet been determined. Approval and implementation of this project in the near future will give a significant impetus to economic recovery and accelerate GDP growth to a double-digit level. The alternative forecast scenario is that if security risks persist in the long run, the economy will grow by only 2% in 2023, but inflation will decrease due to subdued consumer demand.

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