Ukraine says consumption, defence sector to fuel growth

Ukraine says consumption, defence sector to fuel growth

By Olena Harmash

Ukraine's economy grew by 5% in 2023 and will expand by 4.6% this year as a result of higher domestic consumption and expected growth in its defence industry, the country's Economy Minister Yulia Svyrydenko said on Thursday.

Svyrydenko reiterated the forecast for continued growth this year, saying that officials would focus on reforms to make the Ukrainian economy more independent and self-reliant.

Ukraine's gross domestic product (GDP) growth last year was achieved following a 28.8% fall in 2022, she added.

"The more products we produce at home, the more stable the Ukrainian economy will be," she told an online roundtable.

Russia's invasion of Ukraine in February 2022 had a disastrous impact on the economy as millions of people fled the country, cities and infrastructure were bombed, and supply chains, logistics and exports severely disrupted.

In nearly two years of war that have ensued, Ukraine has been dependent on Western financial aid. The government received more than $73 billion from its Western allies in 2022 and 2023.

However, uncertainty hangs over its outlook this year as more than $110 billion in financing was delayed due to political bickering in the European Union and the United States.

War was changing Ukraine's economic structure, Svyrydenko said, with some sectors such as steel, which drove Ukrainian exports before the conflict, damaged as a result.

But agriculture, another key sector, had proved resilient and Svyrydenko said that Ukraine's grain and oilseed harvest had totalled 80 million metric tons last year.

She also said the manufacturing sector had posted growth as companies switched their production to military needs.

This year the government would focus on ensuring growth in domestic weapons production, while another priority was to continue work to support exports and unblock logistical bottlenecks, Svyrydenko added.

The minister forecast that about 1.5 million Ukrainians would return home this year if the security situation improved, which would help boost domestic consumption, while urging all consumers to focus on domestically produced goods.