Impact on the economy
By the way 24 channels said economist Oleg Pendzin. He noted that according to official data from the Ministry of Economy alone, Ukraine has lost 5 million jobs, or about a third of our labor market.
To this we should add minus 32 percent of the gross domestic product and minus 25 percent of the real incomes of the population. So the situation really is very difficult.
The economist explained that the National Bank of Ukraine, in order to somehow cover the needs of the budget to finance extremely important expenses, printed 400 billion hryvnia. Undoubtedly this money also went to the foreign exchange market, went into inflation, which is about 26-27 percent today, and has a chance to grow even more before the end of the year. At the same time, the food basket has risen in price by 36%.
What’s up with the budget
There are also difficulties with the state budget for 2023. It provides for 2.6 trillion hryvnia in expenditure and only 1.3 trillion in revenue. And this despite the fact that direct spending on security and defense alone is $1.145 trillion.
That is, almost everything we collect in the form of taxes and fees will go to security and defense. That is, the entire social program, all social obligations of the state for the next year will be financed by loans,
Pendzin pointed out.
He added that, according to Prime Minister Denys Shmyhal, Ukraine needs about $37 billion next year. It should be understood that Ukraine receives assistance in the form of grants that do not have to be repaid or in the form of loans. Yes, they are long-term, cheap and profitable, but sooner or later they will have to be returned.
And although after the most difficult negotiations and blockade by Hungary, the European Union has promised us EUR 18 billion for next year, this assistance is not a grant, but a loan. In the first 10 years there will be a grace period in which Ukraine will not pay interest. But they will die out at the expense of financial opportunities and financial assistance from countries or EU funds. This is, of course, extremely important, but it’s still a loan and deferred liabilities.
Also, Ukraine receives more loans than grants. Thus, 35% of the total amount of assistance our state received this year is grants and the rest is loans. That is, almost everything that Ukraine has received as a sovereign country, all military titles, are credit resources.
Oleg Pendzin spoke about the state of the Ukrainian economy at the end of the year – watch the video
What will happen next year
The economist noted that this is why our state needs cooperation with partners, because all social programs are financed with the help of allies.
And even so, an increase in, for example, the minimum wage next year is not expected. It will remain at the level of 6700 hryvnia. And although pensions will be indexed, these are not such large amounts. In addition, the state budget for 2023 includes inflation at the level of 28%.
That is, despite the fact that the minimum wage will not increase and, accordingly, wage funds for enterprises will grow very slowly or not at all, 28 percent of inflation will have to be pulled out of pocket,
Pendzin explained.
This means that consumer prices will rise by about a third, but wages will not.
What else to expect in 2023
- The NBU reported that next year Ukraine will continue increase in the price of fuel, although this will happen at a slower pace, up to 20%. The reason is the return of VAT on fuel and the increase in excise duties.
- As for the dollar exchange rate, the NBU will probably be able to keep the official exchange rate at the level of 36.6 hryvnia for another six months, and then it is possible hryvnia depreciation at 10-15%.
- However, next year will be difficult in the economic sphere, not only for Ukraine. Therefore, Bloomberg Economics economist Scott Johnson believes that 2023 will be one of worse for the global economy. The fact is that the projected growth rate of the global economy in 2023 will be the slowest in 30 years.
