Paris, May 6 (Eficom) .- The economy of Ukraine, which had been almost stagnant since 2010 and suffered a sinking for the massive invasion of Russia in 2022, resists but the shy recovery that has been recorded since then is going to slow down this year and next, according to the OECD, which does not expect changes while the war lasts.
In a report published on Tuesday, the Organization for Economic Cooperation and Development (OECD) estimates that after recovering 5.5 % in 2023 and 2.9 % in 2024, the Gross Domestic Product (GDP) of Ukraine will progress 2.5 % this year and 2 % next.
The authors of the study remember that the Russian invasion has caused the displacement of a quarter of the Ukrainian population, inside or outside the country, and that the destruction of homes, companies and infrastructure represent around 2.5 times the GDP.
Also that only in 2022 the activity collapsed more than a quarter and GDP that year was only 71 % than in 2010, that the growth that has occurred since then left it in 77 % in 2024 and that the prospects are not good and are surrounded by “extreme uncertainty”, especially because of the security situation.
“The continuous destruction of companies and infrastructure, the shortage of energy and workers and tax pressures will limit recovery,” warns the OECD.
In that line, it considers that as defense budgets absorb 25 % of GDP, the public deficit will be maintained at stratospheric levels such as in previous years (19 % of GDP this year and 20 % next, after 20.4 % in 2023 and 17.5 % in 2024).
“Once the safety situation, the rhythm and the quality of the application of the reforms, the foreign support and the population movements – add – will determine the rhythm of investment and recovery.”
When that time comes, one of the priorities for the OECD is a monetary policy that contains inflation (this year it calculates that it will rise to 13.2 %, after having contained relatively 6.5 % in 2024) and that allows the deficit with medium -term objectives to be free.
It will also need “a healthy and transparent fiscal management” through an improvement in spending efficiency and dealing with some of those who have traditionally been the problems of the Ukrainian economy, “corruption”, “public integrity” and the barriers of regulation.
The organization points out that although Ukraine has made “significant progress” in that field “corruption remains a great concern that distorts competition and limits business dynamism.”
The authors of the study assume that the restrictions of the martial law and the primacy to the defense have frozen the application of many reforms. But they emphasize that “it will be vital to ensure that the reforms apply fully as soon as the conditions allow it.”
One of the challenges facing the country is that of the scarcity of labor, which although it already experienced depression since the beginning of the century (the workforce went from 23.2 million people in 2000 to 20.3 in 2021), suffered a considerable downturn again with the Russian invasion.
With the mobilization of about one million people for the defense of the country and the displacement inside and abroad of 30 % of the population of working age, that workforce remained in 16.4 million people in 2023, the last year for which the OECD gives figures.
Therefore, the challenge is to facilitate the return of some 6.9 million of those displaced people who are abroad, with improvements in the labor market, but also in housing conditions and in educational services. Effect
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