National Bank of Ukraine: Russian attacks on energy infrastructure lead to a drop in Ukraineʼs GDP and slow down its recovery

Oleksiy Yarmolenko

Russian strikes on Ukraineʼs energy infrastructure lead to worsening forecasts for a drop in GDP in 2022. They will also slow its recovery in 2023.

Deputy Chairman of the NBU Serhiy Nikolaychuk announced this at a briefing, writes Ukrinform.

“As for GDP, this year the decline will be somewhat deeper than we expected. Next year, economic recovery will depend on each of the scenarios,” he said.

The National Bank reminded that it is considering three scenarios in case of continued attacks on energy infrastructure facilities.

As a baseline, the NBU considers a scenario in which the energy infrastructure will be promptly restored, and air defense forces will provide reliable protection of the Ukrainian sky. The second scenario involves deeper damage to critical infrastructure and slower recovery, and the third involves large-scale disruptions in the power system.

“Under our baseline scenario, GDP recovery will be quite sluggish and much lower than we assumed (4%). If the second and third scenarios are implemented, the economy will shrink next year as well,” Nikolaychuk said.

  • Due to Russian missile attacks on the energy infrastructure in Ukraine, there is a significant shortage of electricity. Ukraine has to test the export of electricity from Europe, but the head of the Verkhovna Rada committee on energy issues says that it will provide less than 10% of the needs.
  • At the end of November, it became known that Ukrenergo and the leadership of the Odesa region are negotiating with Karpowership about the lease of floating power plants. The placement of stations near Odesa was discussed, but no one could provide guarantees regarding their safety.