Economic activity in Ukraine in H1 2024

Macroeconomic indicators of the Ukrainian economy in 2024 show growth, but the positive dynamics is slowing down. By now, the growth potential has already been exhausted due to the recovery from the fall in 2022.

Real GDP in Q2 2024 increased by 0.2% (seasonally adjusted) compared to the previous quarter, and by 3.7% compared to Q2 2023. Ukrainian GDP in 2023 grew by 5.3% after a decline of 28.8% in 2022.

The volume of industrial production in Ukraine at the end of January-June this year increased by 8.1% compared to the same period in 2023. Recall that at the end of 2023, this indicator increased by 5.9% y/y.

Among the main sectors of the processing industry, which have the greatest impact on the structure of industrial production, we have this half-year dynamics:

• steel production – growth by 29.8%;
• food industry – growth by 15.9%;
• mining industry – growth by 9.3%, including mining of metal ores – growth by 27.6%;
• energy – growth by 1.5%;
• mechanical engineering – -0.9%.

Construction shows quite high dynamics due to the restoration of infrastructure damaged by military operations. According to the results of the first half of 2024, the volume of completed construction works in Ukraine increased by 37.1% – up to UAH 82.4 billion. The positive dynamics of individual segments of the construction industry wa

• engineering structures – by 46.1% year-on-year, to UAH 49.7 billion;
• non-residential construction – by 31.6% year-on-year, to UAH 21 billion;
• housing construction – by 16.8% year-on-year, to UAH 11.8 billion.

Overall, economic activity improved slightly after the May dip caused by power shortages following Russian strikes on energy infrastructure. In September, the business activity expectations index rose to 48.7 from 48.4 in August. As a reminder, the neutral level is 50 points.

Firing on critical infrastructure, worsening exchange rate expectations and labor shortages remain constraining factors for further business activity. In September, an increase in fuel excise duties and accelerating inflation were added to the list. In the near term, increased tax pressure and power shortages may be among the deterrents.