NBU: The growth rate of Ukraine’s GDP has slowed down

NBU: The growth rate of Ukraine’s GDP has slowed down

In Ukraine in 2024, real GDP grew by 2.9%, according to detailed indicators published by the State Statistics Service of Ukraine. The slowdown in economic growth in 2024 was expected due to the deterioration of the security situation, the return of electricity shortages, and low harvests.

This is stated in the comment by the NBU. On one hand, GDP growth slowed compared to 2023 (from 5.5% according to revised data). On the other hand, Ukraine’s economy is recovering for the second consecutive year amid large-scale war and constant attacks by Russia on production facilities and infrastructure.

The economy was supported by high domestic demand, a soft fiscal policy, significant business adaptability, as well as the efforts of the NBU to ensure macro-financial stability.

The actual growth rates of real GDP were lower than the National Bank’s forecast published in the inflation report for January 2025 (3.4%). This is partly due to the resumption of GDP decline in the fourth quarter of 2024 (by 0.1 pp) due to a significant reduction in agricultural performance (by 30.3% y/y). Partial impact was also caused by the rise in the comparison base due to the improvement of the SSSU’s indicator of economic growth in the fourth quarter of 2023 within the traditional GDP revision.

Consumption continued to support economic recovery. Private consumption provided the largest positive contribution to the growth of real GDP in 2024. The increase in the final consumption expenditures of households accelerated to 6.8% and was supported by high growth rates in real wages, according to SSSU data.

Exports returned to growth, and import volumes continued to increase. Physical export volumes in 2024 grew for the first time since 2019 – by 10.3% y/y, primarily supported by the stable operation of the maritime corridor. At the same time, the revival of domestic demand was largely ensured by imports, whose physical volumes increased by 7.7%. As a result, the contribution of net exports to real GDP growth remained negative (-0.9 pp), although it decreased compared to previous years.

Economic results by activity types were uneven. The most negative contribution to GDP growth in 2024 came from agriculture. The gross value added (GVA) of this sector decreased by 7.3% by the end of the year due to a lower harvest. Hot weather and drought in the summer and early fall negatively affected crop yields, especially late crops. Lower harvests led to increased feed prices, which restrained the development of livestock farming.

The resumption of electricity shortages due to new destructions of Ukraine’s energy infrastructure by Russia also restrained economic growth. Although the situation remained relatively stable thanks to repairs and electricity imports, the GVA of the energy sector decreased by 2.7% for the year.

Energy deficits, intensified shelling, and lower volumes of agricultural raw materials for processing restrained the development of the manufacturing industry. The growth of GVA in this sector slowed to 6%.

Thanks to increased gas and metal ore extraction, growth in the mining industry resumed – GVA increased by 3.6%. In addition, the stable operation of the maritime corridor significantly impacted financial results in metallurgy and the transport sector.

Although the trade sector’s GVA in 2024 decreased by 4.1%, consumer demand remained robust, as evidenced by strong retail and service sector performance.