The total losses of the Ukrainian economy as of May of this year, as a result of the war, amounted to 564-600 billion dollars. Currently, these numbers are higher.
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Due to the full-scale Russian military invasion, the economic situation in Ukraine is deteriorating. The rating agency predicts a contraction of the country's economy in 2022by 33%, with a slight recovery of 4% in 2023. Against the background of the war and its associated losses, Fitch lowered the long-term issuer default rating for Ukraine in foreign currency from “CCC” to “C”. While the “D” rating actually means default.
Recently, on July 20, the government of Ukraine officially announced its agreement to postpone the repayment of the foreign debt for two years. The Fitch agency considers the situation as corresponding to the “C” ratings, i.e. “high risk of default”.
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Ukrainian currency reserves, during the four months of the war, decreased to 22.8 billion dollars, as of the end of June, from 28.1 billion dollars at the end of March. This happened partly due to the outflow of $9.1 billion related to trade credits and cash withdrawals by refugees abroad.
The budget deficit is a record high for Ukraine. In the second quarter of the current year, the monthly deficit averaged 4 billion. Fitch forecasts an annual figure of 29.1% of GDP. Next year, 2023, the agency predicts a similarly high deficit of 22.4% of GDP due to the continued need to finance the war and rebuild critical infrastructure.
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Among other unfavorable factors, Fitch notes the rapid growth of public debt and inflation.
Earlier, ZN.UA reported that inflation in Ukraine may be 75% in November-December.
