By KYIV. Nov 22 (Interfax-Ukraine) – Dragon Capital investment company, one of the leaders in the Ukrainian market, worsened its forecast for a decline in real GDP this year by 2 percentage points, to 32% and retained its forecast for a decline in 2023 by another 5%, despite the improvement in the key assumption about the course of the war.
"The negative impact on the Ukrainian economy from power outages resulting from Russian shelling of energy infrastructure has been moderate so far. However, the shelling is likely to continue, and the increase in electricity demand in winter will force the scale and duration of outages to increase," the company said.
According to the report, the GDP forecast for next year is based on the assumption that Ukraine will gradually liberate the occupied territories and be able to end the hot phase of the war on acceptable terms next year, closer to autumn, while earlier the key assumption of the macro forecast was a long continuation of the war and attrition.
"We expect that as a result of a significant reduction in war risks, the operation of key seaports will be completely unblocked, at least half of the forced migrants (about 4 million people) will return from abroad, and Ukrainian private business will resume investment activities," Dragon Capital said.
At the time, its analysts note that given the damage to manufacturing facilities by the enemy and the destruction of supply chains, the pace of the initial post-war economic recovery will be moderate and insufficient to offset the economic losses in early 2023 caused by attacks on energy infrastructure.
"The launch of a large-scale program to restore the Ukrainian economy will most likely take time and will begin as early as 2024," the investment company suggests.
The report emphasizes that international financial assistance remains a critical factor in ensuring macro-financial stability. According to Dragon Capital estimates, recent announcements and moves by international partners suggest an increase in international support in 2023 to $42 billion from $32 billion this year, mainly due to the U.S., the EU and, to a lesser extent, the IMF.
