Ukrainian GDP growth slows down to 6.5% in Oct YoY - research institute

Ukraine's real GDP growth slowed down to 6.5% in October from 11.1% in September year-on-year primarily due to the agricultural sector's smaller contribution to GDP because of a higher statistical base in October 2022, the Institute for Economic Research and Policy Consulting (IER) said in a statement.

"However, according to our estimate, real GDP in October 2023 was 28% lower than that in October 2021," Ukrainian media quoted the IER as saying in its monthly economic monitoring bulletin, according to Interfax.

On the other hand, real gross value added (GVA) in the industrial sector grew faster due to a lower base in October 2022, the IER said. It estimated its growth at 16% due to a better situation in both the metallurgical and machine-building sectors and pointed out that a survey of businesses it conducts every month indicated that the business community remained optimistic and planned to increase production.

An increase in the production of ores and construction materials prompted real GVA growth in the extracting sector by 5% in October, and production in the energy sector increased by 6.4% due to a lower base in 2022, including owing to the completion of planned maintenance at nuclear and thermal power plants.

Real GVA in the retail sector also grew in October owing to the resumption of imports and growing nominal consumer incomes amid slowing inflation, it said.

"By our estimates, real GVA in the transport sector declined by 1.8% in October," it said.

The IER pointed out that exports by road via Ukraine's western border in October 2023 were hindered by a policy pursued by Ukraine's neighbors, primarily Poland, particularly a strike of Polish truckers continuing since November 6.

Among other key economic events in October, the IER mentioned a new all-time high deficit in trade in goods and services, as well as inflation's drop to 5.1% year on year, i.e. within the National Bank of Ukraine's target, which has happened for the first time since 2020. "However, economic recovery could accelerate price growth," it said.

As reported, the IMF improved its forecast for Ukraine's economic growth in 2023 to 4.5% from 1%-3% at the end of last week. However, it anticipated growth to soften to 3%-4% in 2024 as the crisis continues and noted that downside risks to the outlook remained "exceptionally high."

The EU last week assessed expected Ukrainian economic growth in 2023 at 4.8% and anticipated it to slow down to 3.7% in 2024.

In late October, the National Bank of Ukraine improved Ukrainian GDP growth to 4.9% from 2.9% in 2023 and to 3.6% from 3.5% in 2024, while revising it down to 6% from 6.8% in 2025.

The government improved its 2023 GDP growth outlook to 5% from 2.8% but worsened it to 4.6% from 5% for 2024 when a draft state budget was approved for the second reading in early November.