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Bankers expect NBU to worsen Ukraine's GDP growth estimate in 2023 to 1-3.3%, assess inflation slowdown below 21%

KYIV. Jan 25 (Interfax-Ukraine) – The National Bank of Ukraine (NBU) will worsen the forecast estimate of real GDP growth in Ukraine in 2023 from 4% to 1-3.3%, while inflation by the end of the year will slow down growth to 19-21%, bankers polled by Interfax-Ukraine believe.

"The October macro forecast of the National Bank was too optimistic and assumed GDP growth of 4% in 2023. But already in November it became clear that due to the shelling of the energy infrastructure, the relevance of such estimates has significantly decreased. Therefore, in my opinion, this forecast will be revised towards decrease to more moderate values of 3-3.3%," expects head of the board of Unex Bank Ivan Svitek.

At the same time, according to him, it should be recognized that this forecast is also based on a number of assumptions regarding the timing of the end of the war and the intensity of shelling of the energy infrastructure, as well as the speed of its restoration, which cannot be calculated now.

The banker recalled that, according to preliminary estimates of the NBU, by the end of 2023 inflation should slow down to 21%.

"Most likely, this assessment will not change significantly. On the one hand, the slowdown in price growth and the less significant than expected impact on the electricity deficit at the end of last year does not give grounds to worsen the forecast. On the other hand, there are still no reasons for excessive optimism," he explained.

In turn, Kostiantyn Khvedchuk, the strategic development analyst at Pivdenny Bank, expects that the NBU is likely to worsen its forecast for GDP growth this year to about 1% due to the destruction of the energy infrastructure.

"Inflation forecast for 2023 may slightly improve (up to 19-20% y/y) as a result of lower energy prices. However, the forecast for the key policy rate is likely to remain unchanged, signaling that significant risks for inflation and the exchange rate remain," he said.

Oleksiy Blinov, the head of the analytical department at Sense Bank, noted that according to the bank’s baseline forecast inflation will begin to slow down in the first quarter of 2023 and in the summer, most likely, will reach indicators that will be significantly lower than 20% in annual terms (against the current 26.6%).