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Macro Review-Ukrainian Economy: Stuck in Limbo

Ukraine's economic recovery will be gradual, not impressive, but not too disappointing either. In 2020, the relative resilience of the economy could be explained by its structure, macroeconomic reforms of previous years, favourable terms of trade, and a sharp adaptation of the population and business against the background of rather weak fiscal stimuli. In 2021-22, the ability to vaccinate the population and avoid strict quarantine restrictions amid the spread of new, more dangerous strains of coronavirus will play a key role. Ukraine's capacity in this area remains very weak, which significantly limits the potential for economic recovery. Meanwhile, the world is being vaccinated and opening even faster than previously expected, generating stronger external demand for the Ukrainian economy. As a result, we downgrade 2021 GDP growth only slightly, to 5.2% compared with 5.6% in our , and project slowdown of 2022 GDP growth to 3.8%. However, this scenario is based on the assumption that 50% of Ukraine's population will be vaccinated by the end of the year, which requires significant progress. Should the pace of vaccination fail to accelerate, recovery will be slower due to additional quarantine restrictions.