“Experts of the International Monetary Fund have updated the forecast of the duration of Russia’s war against Ukraine. The deadlines for the end of intensive hostilities in the base scenario remain unchanged. This is reported in the Memorandum with the IMF. “The scenario still assumes that the war will end by the end of 2025, and the assumptions about the development of the energy sector and the main political goals will remain,” the document says. In particular”, — write on: ua.news
Experts of the International Monetary Fund have updated the forecast of the duration of Russia’s war against Ukraine. The deadlines for the end of intensive hostilities in the base scenario remain unchanged.
This is reported in the Memorandum with the IMF.
“The scenario still assumes that the war will end by the end of 2025, and the assumptions about the development of the energy sector and the main political goals will remain,” the document says.
In particular, the basic scenario provides for:
The growth of the real GDP of Ukraine in 2024 will be 4%. This is by 1 p.p. higher than the IMF forecast for October.
The economic impact of winter energy shortages may be more limited than previously anticipated (despite recent attacks) due to business investment in own generation capacity, increased potential for imports from Europe, and efforts to repair and install additional generation and distribution capacity.
The inflation forecast for the end of the year was increased by 1 cent. p. up 10%, largely due to continued pressure from an acceleration in raw commodity prices, which also weighed on food-related staples, as well as the carryover of wage growth and energy costs.
For 2025, the revision of the baseline scenario is minor compared to October.
The forecast for real GDP growth is unchanged at 2.5-3.5%, as higher potential from faster power capacity repairs in 2024 and new capacity in 2025 will be offset by the effects of a tighter labor market, supporting stronger income and consumption growth amid weakening of price pressure in the second half of the year.
The average inflation rate was revised upwards by 1.3 percentage points. p. to 10.3%. Mostly temporary inflationary pressures are expected to ease, bringing year-end inflation to 7%.
In the medium term, the forecasts of the main economic variables have changed little. In line with recovery expectations, real GDP growth would pick up in the immediate post-war years before gradually returning to its potential of 4%; inflation will gradually approach the NBU’s target level of 5% in 2027 as war-related inflation volatility declines.
It will be recalled that in October 2024, the experts of the International Monetary Fund updated the forecast of the duration of the war between Russia and Ukraine, pushing back the terms by a year. In the baseline scenario, the war will end at the end of 2025. In June, the IMF projected the end of the war at the end of 2024 in the baseline scenario, and the end of the war at the end of 2025 contained the fund’s negative forecast.
We previously wrote that, as at the beginning of this year, the World Bank expects that the Ukrainian economy will grow by 3.2% by the end of 2024.
We will also remind you that the International Monetary Fund (IMF) predicts that the world debt will exceed 100 trillion dollars by the end of 2024, and by the end of the decade will approach 100% of world GDP.
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