Ukraine's unemployment rate hits 35%, inflation to reach over 30% in 2022: National bank

Ukraine's inflation will reach above 30% and gross domestic product (GDP) will decrease by a third in 2022, the National Bank of Ukraine said in the quarterly Inflation Report of July 2022 on Friday. The bank noted that the ongoing Russian military offensive has been causing losses to the Ukrainian economy and creating strong inflationary pressure. It further stated that the economic activity has been reviving since April as Ukraine continues to liberate the regions and reduction in several regions affected by active hostilities. The deep economic recession has resulted in an increase in unemployment which has reached around 35% in the second quarter of 2022. 

"The consequences of the war will cause the Ukrainian economy to shrink significantly in 2022, but the economy will return to growth in 2023," the National Bank of Ukraine said in a statement. 

According to the bank, the economy of the war-torn nation is expected to return to growth in 2023. The National Bank of Ukraine underscored that inflation in the country will accelerate by the end of 2022 and it will begin to decline in the first quarter of 2023. In the latest report, the bank said that inflation will reach 31% as the majority of supply continues to remain affected due to hostilities and high energy prices. It further stated that inflation is expected to slow in 2023 due to improved inflation expectations, logistical processes, investment activities and a gradual rise in harvests. According to the bank, consumer inflation will witness a drop and it will reach around 20% in 2023 and further reduce to a single-digit value in late 2024. 

GDP to witness an increase at around 5%-6% pace in 2023-2024: National Bank

The National Bank of Ukraine noted that the GDP will increase at a pace of around 5% to 6% per year between 2023 to 2024. It stated that unemployment will gradually reduce but will remain above its natural level due to the long-term effects of the war. The drop in economic activity has caused a fall in the household income of Ukraine. The bank noted that the forecast has been made based on the assumption that Ukrainian ports at the Black Sea will be fully operational from 2023. The National Bank of Ukraine expected that financial support extended by the international community to Ukraine will continue to help the country finance its budget needs and close its balance of payments gaps. It warned that if security risks continue to persist for a long time, the economy will witness an increase of only 2% in 2023, however, inflation will witness a drop. 

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