KSE forecasts for the future of Ukraine's economy: GDP, unemployment, wages and the hryvnia exchange rate

For the first time during the war, analysts of the KSE Institute prepared a forecast of the development of Ukraine's economy, which includes estimates of GDP, wage levels, inflation, unemployment, and the hryvnia-to-dollar exchange rate. KSE President Tymofiy Mylovanov said that the analysis required significant preparatory work, which, according to him, became important for assessing the real prospects of economic recovery of Ukraine in wartime conditions.

The main economic indicators show that the Ukrainian economy is facing long-term difficulties. According to KSE forecasts, real GDP in 2027 will remain 10% lower than the pre-war level. However, a gradual recovery is expected: real wage growth, after falling by 11.3% in 2022, will be 3.6% in 2023, and around 14.1% in 2024. Unemployment, which peaked in 2022 at 21.1% and is estimated to fall to 10% by 2027, is also falling.

Forecasts indicate a stable demand for specialists despite the country's population decline. The highest salaries are predicted in the fields of IT, construction and defense industry, which demonstrates the positive dynamics of the development of these industries even in wartime.

Inflation will remain above the target level of 5% until 2027, and the hryvnia-to-dollar exchange rate is forecast to rise from UAH 42.6 at the end of 2024 to UAH 48.6 in 2027. The issue of external financing remains important: according to estimates, Ukraine will need an additional 90 billion dollars by 2027 for full economic recovery.

Ukraine's energy sector is also experiencing significant losses. Since the beginning of the war, power generation capacity has halved to 18 GW, and the amount of losses in this sector has reached 11 billion dollars. In the winter period of 2024/25, the shortage of electricity may amount to 15% to 30% of peak demand. The majority of enterprises — 88% — are already preparing for possible shutdowns, and the production of electricity with diesel generators costs UAH 25 per kWh, which is an expensive and temporary solution.

Changes in economic forecasts are also confirmed by international organizations. The World Bank lowered its economic growth forecast for Ukraine for 2025 to 2%, taking into account the damage caused by Russian attacks and disruptions in energy supply. The Ministry of Economy of Ukraine predicts that in 2024 the GDP of Ukraine will grow by 4.6%, but the National Bank of Ukraine estimates this indicator more modestly - at the level of 3% this year and 4.5% in the next.

The situation in the energy industry also affects the country's GDP. Due to strikes on energy infrastructure this spring, Ukraine may lose 1-2% of GDP, which is associated with a reduction in revenues from electricity exports and a decrease in production in industrial sectors that consume significant amounts of energy.