On Thursday (September 8), local time, the latest data released by Ukraine’s Bureau of Statistics showed that the country’s gross domestic product (GDP) expanded in the second quarter, with a decline of nearly 40% year-on-year.
Specific data show that Ukraine’s real GDP in the second quarter fell by 19.1% month-on-month and 37.2% year-on-year. According to media analysis, since the outbreak of the Russian-Ukrainian conflict in February this year, the country’s economy has been hit hard.
Exports, the main driver of the country’s economy, were stifled, while much of the investment went to war. The Ministry of Economy of Ukraine expects GDP to fall by 33.2% in 2022.
On the same day, the Central Bank of Ukraine announced that the benchmark interest rate will remain unchanged at 25%, in line with market expectations. Deputy Governor Serhiy Nikolaychuk said the central bank believes interest rates at this level will keep the domestic currency stable and domestic assets attractive to foreign investors.
Nikolaychuk acknowledged that Ukrainian inflation continued to accelerate higher in July and August, with upward pressure remaining strong. The latest data released by the Central Bank of Ukraine predicts that the domestic inflation rate will reach 23% in 2022.
He said that the war in the Udong region is still the main risk to the country’s economy, and when the economy recovers and when prices return depends largely on when the “active phase” of the war ends. The central bank expects inflation to moderate over the next few years, but above its 5% target.
However, there have been some positive signs recently. Under the Ukrainian Food Security Transport Initiative, the country resumed exports of grains in August, freeing up storage space for newly harvested grains.