The National Bank published five key conclusions from the latest macroeconomic and monetary review of the NBU, which characterize the current state of the Ukrainian economy.
1. Inflation accelerated, but its level is moderate for a country at war. According to the NBU's estimates, consumer inflation in Ukraine accelerated in December, but was lower than the NBU's October forecast.
Inflation was kept down by: expansion of food supply, liberation of occupied territories, weak consumer demand, strengthening of the hryvnia cash rate and stabilization of inflationary expectations, as well as unchanged tariffs for housing and communal services.
2. Businesses are adapting to blackouts, but their costs have increased and production has decreased.
In December 2022, the shortage of electricity most limited economic activity. Most enterprises reduced production, although some managed to stabilize work. The business buys generators, changes its work schedule — does everything to continue operating under such conditions. This significantly increases production costs.
3. The labor market situation remains difficult. Shelling and prolonged power outages have reduced the demand for labor. These same factors and pre-holiday trips increased the intensity of border crossing at the end of the year. Thus, in the last week of 2022, the number of arrivals and departures was the highest since October.
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4. Assistance from international partners provided support for the state budget and reserves of Ukraine. From the start of the full-scale invasion to the end of 2022, international financial aid exceeded $31 billion. Thanks to a steady flow of funds from partners, international reserves rose to almost $28 billion at the end of November and continued to grow in December.
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5. Hryvnia rates continue to rise. Interest rates on hryvnia deposits continued to rise, responding to the maintenance of the discount rate at the level of 25%, starting from June. In order to reduce the excessive level of banks' liquidity and stimulate term loans, the NBU increased the requirements for their mandatory reserves. This decision will contribute to increasing the attractiveness of hryvnia savings.
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