According to the latest report of the National Bank of Ukraine, the situation in the country's economy is deteriorating due to the growing wave of emigration, the acceleration of inflation and the growing demand for foreign currency. Such factors lead to the reduction of foreign exchange reserves, which creates additional pressure on the stability of the financial system.
In the third quarter of 2024, another 200,000 Ukrainians left the country due to summer electricity problems and negative expectations regarding the heating season. This is stated in the latest inflation report of the National Bank in 2024.
"According to the UN, the number of Ukrainian migrants increased by almost 200,000 during the 3rd quarter, and the growth continued at the beginning of the 4th quarter - to almost 6.8 million people as of mid-October 2024. The risks of further increase in migration outflow remain significant," the report states. And also talks about the ongoing negative impact of the migration factor on the labor market.
In the same report, the National Bank predicted an increase in the population's demand for cash foreign currency. At the same time, he recognized the devaluation of the hryvnia in the third quarter by 3.2%. On November 8, the official rate of the National Bank of Ukraine was UAH 41.36/$, and the interbank rate this week reached UAH 41.54/$, but fell back to UAH 41.3/$. Today, the average dollar cash rate for sale at banks is 41.63 UAH/$, and the maximum is 41.80 UAH/$.
But the National Bank analysts say that they are doing everything to stabilize the situation on the currency market - namely, they increased the NBU's interbank foreign exchange sales in the III quarter of 2024 from $8.3 billion (II quarter) to $9.2 billion.
"Among the key factors determining the demand for foreign currency, there were high budget expenditures, taking into account significant amounts of international aid. Seasonal and situational fluctuations in demand and supply of foreign currency from producers of agricultural products also had a small impact on the foreign exchange market. In the conditions of weak global demand, revenues from iron ore exports decreased, which was compensated by the increase in metallurgy supplies against the background of the gradual recovery of the ferroalloy industry. At the same time, the demand for foreign currency increased slightly due to the significant need for the purchase of energy equipment and electricity in view of the difficult situation in the energy system and the increase in fuel imports in anticipation of tax increases. The activation of summer vacations and the invigoration of migration led to higher spending by Ukrainians abroad," the inflation report says.
It is also specified that Ukraine plans to spend $1 billion annually on the purchase of electricity in Europe.
According to the results of 2024, Ukraine expects to receive $41.5 billion in foreign aid, and in 2025 - $38.4 billion, which will lead to a reduction in the NBU's gold and currency reserves:
- to $41 billion - by the end of 2025;
- up to 35 billion - by the end of 2026.
Although the regulator promises to support the foreign exchange market and the hryvnia exchange rate even in such conditions, without, however, clarifying the forecast of this exchange rate.
The National Bank also listed the economic risks of Ukraine that the war will generate:
1. Additional budgetary needs, primarily to support defense capability.
2. An additional increase in taxes is possible, which, depending on the parameters, may increase price pressure.
3. Further damage to infrastructure, primarily energy and port infrastructure, which will limit economic activity and put pressure on prices.
4. The deepening of negative migration trends and the further increase of the labor shortage in the domestic labor market.
According to the results of 2024, the National Bank predicted inflation at the level of 9.7%, and its chairman Andriy Pishnyi added in his comment on Facebook that at the beginning of 2025 it may exceed 10% on an annual basis.
"In the coming months, price pressure will remain due to a smaller supply of certain food products than last year, an expansion of aggregate demand due to significant budget expenditures, further aggravation of disparities in the labor market and a shortage of electricity during the heating season," the NBU inflation report says.
