Attacks on Russian Black Sea Fleet bases allow Ukraine to gradually restore grain exports

Last week, the World Bank improved its forecast for the growth of the Ukrainian economy. 

According to the updated forecast, Ukraine's real GDP growth is expected to reach 3.5% and 4% in 2023 and 2024, respectively, which is 1.5 and 0.5 percentage points higher than the mid-2023 estimates. 

According to the World Bank, the main risks for Ukraine remain security, destruction of infrastructure and logistics, and rising energy prices. At the same time, the recovery is supported by a more stable electricity supply, increased government spending, large external assistance, and a better-than-expected harvest. 

The main assumption of the forecast is the duration of the active phase of hostilities. According to the baseline scenario, security risks are expected to decrease significantly from the second half of 2024. As a result, economic growth is expected to reach 6.5% in 2025.

Also Financial Times published that if Ukraine joins the EU, it could receive about EUR 186 billion from the EU budget during the first seven years of membership. The lion's share (EUR 96 billion) of these funds would be allocated to subsidies for agriculture, and the rest would be used to "bring" infrastructure to the average level among member states. 

While these figures seem impressive, Ukraine's financial needs for reconstruction are much more substantial. According to the latest estimates by the Russia Will Pay project for assessing infrastructure damage and economic losses caused by Russian aggression, the total amount of direct documented damage to Ukraine's infrastructure caused by Russia's full-scale invasion has increased to USD 151 billion (of which infrastructure is USD 37 billion). This amount is already comparable to the potential revenues from EU membership, but will be needed much sooner than seven years after accession.

Successful attacks on the Russian Black Sea Fleet bases in the temporarily occupied Crimea allow Ukraine to gradually establish grain exports through temporary corridors for merchant ships. 

As of early October, more than 20 vessels had already used this corridor. This reduces potential risks for exports of the new harvest, which, due to favorable weather conditions, will be higher than previously forecast.

Specially for Expreso.

About the author: Bohdan Danylyshyn, professor at the Kyiv National Economic University named after Vadym Hetman, former head of the National Bank of Ukraine council.