Ukraine’s GDP this year will contract by 30%, estimated Olena Bilan, chief economist at Dragon Capital, a Ukrainian investment firm and publisher of NV.
However, if Ukraine could lift the blockade at its seaports to restart the flow of goods to global markets – the economic contraction may be smaller, in the range of 22-25%.
“A 50% GDP contraction by the end of the year is too pessimistic an assessment,” Bilan said during an online discussion organized by CASE, a think tank.
“It could only happen if the invaders have more progress in occupying new territories. But I think that’s not going to happen. We can talk about a 30% economic contraction – if the intensity of combat will be on a downward trend. If the seaports will be unblocked – then the economy would diminish by 22-25%.”
Meanwhile, Oleksandr Parashchiy, chief analyst at Concorde Capital, another Kyiv-based investment company, has a different estimate: that GDP may fall by 35-45%.
“Even if the war will end today, we’ll be able to recover at most 80% of what we had before February… On average, by year-end we’ll have a GDP contraction closer to 35-45%,” said Parashchiy.
Earlier, Tomas Fiala, CEO of Dragon Capital, forecasted the contraction of the Ukrainian economy by 30% this year amid Russia’s full-scale invasion.
According to the calculations made by the Wall Street Journal, the U.S. Biden administration has pledged to provide Ukraine with at least $53 billion in financial assistance through various programs. Some of those programs have their timelines extended to the end of 2023.
Moreover, the European Commission has crafted a program of financial assistance for Ukraine which includes EUR 9 billion ($9.6 billion) in grants and loans. This aid has an emphasis on humanitarian issues – like covering the living necessities for internally displaced people.
President Volodymyr Zelensky said on June 2 that the Russian army controls approximately 20% of Ukraine’s sovereign territory, which means that any economic activity there is at a minimal level.
The ongoing economic crisis caused by Russia’s war includes a sharp rise in unemployment, the extensive cost-cutting policy at local companies, and a drop in consumer activity. However, according to an analysis by Privatbank, Ukraine’s largest bank, consumer expectations started a slow recovery in May with people affording to buy more non-essential goods, especially in the regions that are considered to be safe.