Economic review in August 2024. How this year’s harvest will impact Ukraine’s economy

Since March 2022, the Centre for Economic Strategy (CES), together with the German Economic Team (GET), has been preparing monthly reviews of Ukraine’s economy during a full-scale war.  All notes can be found under the link.

Executive summary:

• Special topic: After three years of favourable weather conditions, Ukraine faced heat and drought in 2024. While the harvest of early grains and oilseeds declined only slightly in 2024, the drought will have a significant impact of the late grains and oilseeds. Grain and oilseeds harvest expected to decline by 10%; exports of grains and oilseeds may decline by 12-15%.
• Macroeconomic trends: IMF forecasts GDP growth by 3% in 2024, which is a bit lower than NBU forecast of 3.7%. Business expectations improved in August as domestic demand was sustained, businesses further adaptated to the power outages, and logistics remained stable.
• Sectoral analysis: Electricity deficit decreases after hot August despite massive Russian shelling. Steel production declines again, but still higher than in 2023. IT industry hires after staff cuts in the first half of the year. Agricultural exports grow seasonally with the start of new crop exports
• Monetary, FX, and Banking sector: Inflation accelerated to 7.5%, and key rate policy did not change – 13%. International reserves increased by 13.7% to $42.3 bn, while hryvnia slightly depreciated. FX household deposits resumed growth, along with UAH and FX corporate and retail loans.
• Fiscal sector: Tax revenues strong and growing; defence spending is limited by own revenues, military support decreased. In August, Ukraine received $8.5 billion in foreign financing for the state budget.

Participants:

• Tetiana Adamenko, Head of the Department of Agrometeorological Forecasts in Ukrainian Hydrometeorological Center
• Taras Vysotskyi, First Deputy Minister of Agrarian Policy and Food of Ukraine
• Nataliia Shpyhotska, Senior Analyst at Dragon Capital
• Viacheslav Chuk, Chief Commercial Officer of Astarta-Kyiv.

Moderator: Hlib Vyshlinsky, Executive Director of CES.