“The updated IMF baseline scenario for Ukraine predicts the end of the war at the end of 2025, while the negative scenario predicts its end in mid-2026.”, — write: epravda.com.ua
The updated IMF baseline scenario for Ukraine predicts the end of the war at the end of 2025, while the negative scenario predicts its end in mid-2026. This is stated in the sixth review within the framework of the IMF Extended Financing Facility. The basic scenario of the development of events in Ukraine continues to assume that Russia’s war against Ukraine will end at the end of 2025. In its sixth report, the IMF notes that real GDP growth in 2024 reached 4% in annual terms, which is 1 p.p. more than in the fifth survey.Advertisement: At the same time, the economic consequences of electricity shortages in winter may be weaker than previously expected. This is due to business investment in its own generating capacity, growing capacity for imports from Europe and efforts to repair and install additional generating capacity and distribution networks. Inflation at the end of the year was revised upwards by 1 cent. p. to 10%, primarily due to continued pressure from the acceleration in raw food prices, which also affected staple food items, as well as depreciation of prior periods, rising wages and energy prices. The real GDP growth forecast remains unchanged at 2.5-3.5% in 2025. This is due to higher potential from accelerating power capacity repairs in 2024 and new capacity additions in 2025, which will, however, be offset by the effects of a tighter labor market, which will support higher income and consumption growth amid easing price pressures.Advertisement: Average inflation was revised upwards relative to the last IMF report by 1.3 percentage points. to 10.3%. Analysis of economic indicators according to the basic scenario of the IMF IMF The negative scenario from the IMF predicts a longer war that will end in mid-2026. The scenario assumes a longer and more intense shock to economic activity, fiscal needs and the balance of payments compared to the baseline scenario, with corresponding implications for macroeconomic policy. The total external financing deficit under the worst-case scenario is $177.2 billion, compared to $148 billion under the baseline scenario. The negative scenario also predicts a reduction in real GDP followed by a slow recovery; higher and more stable inflation; deterioration of the current account balance without taking into account grants; international reserves will remain below 100% of the ARA criterion until 2027; a total deficit excluding grants that will remain above 20% until 2026. Analysis of economic indicators of the negative IMF scenario. IMF We will remind: the Board of Directors of the International Monetary Fund completed the sixth review of the extended financing program for Ukraine and approved the allocation of a new tranche in the amount of 1.1 billion dollars.