Ukraine Economy Beats Expectations During Wartime

The Ukraine economy is beating expectations nearly a year into the war.

The country’s economic growth is expected to level off or even grow as much as 1% in 2023 after dropping 30% this year, Bloomberg reported Tuesday (Dec. 27).

In addition, the inflation rate is rising less than expected — at 28% as opposed to the anticipated 30% — according to the report.

National Bank of Ukraine Governor Andriy Pyshnyi told Bloomberg that these trends are being driven by households, businesses and currency and banking markets that have carried on working, air-defense systems that have proven to be effective, and power grid repairs that have been made quickly.

In this resilient environment, the number of payment card transactions being made has been increasing each month, despite the war and power outages, and diesel generators have been being imported, according to the report.

“We see that the economy — and this is an amazing thing — shows adaptability, resilience and flexibility,” Pyshnyi said in the report. “Ukrainians are modeling unique behavior in unprecedentedly stressful situations.”

Ukraine aims to secure loans from the International Monetary Fund (IMF) early in 2023 to further bolster its economy, and Pyshnyi said there’s a chance of getting the loans even though the IMF traditionally doesn’t lend to countries that are at war, according to the report.

“We are now rewriting rules,” Pyshnyi said in the report. “This full-scale war should force a rethinking of regulations and approaches not only in international financial organizations, but also in international politics.”

As PYMNTS reported Oct. 7, a survey by Payoneer found that the small- to medium-sized business (SMB) space in Ukraine’s technology sector is strong, with 70% of the firms still operating, 63% retaining most, if not all, of their employees, and 38% intending to hire more staff this year despite the war.

“The Ukrainian workforce has shown remarkable resilience since the war began,” Payoneer Senior Vice President of Europe James Allum said at the time. “It is amazing to see how SMBs have continued to operate under these terrifying conditions, and my message to the global business community would be to continue to engage with businesses and freelancers in Ukraine.”

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