The National Bank of Ukraine predicted that about 700,000 people will leave Ukraine during the remainder of this year and next year

By the end of 2024 and throughout 2025, approximately 700,000 more people could leave Ukraine.

This forecast was provided by the National Bank of Ukraine in its July inflation report.

According to their estimates, 400,000 people will leave the country in 2024, and 300,000 will leave in 2025. The gradual return of Ukrainians to their homeland is only expected to begin in 2026.

“The return of migrants to Ukraine is expected to start in 2026 and will be gradual — about 400,000 people. Due to the prolonged stay abroad, adaptation in a new place will increase, and conditions in Ukraine, including energy supply disruptions, will be more challenging than previously anticipated,” the report states.

The continued emigration of Ukrainians abroad is explained by ongoing energy and economic problems at home, as well as security risks.

The National Bank of Ukraine notes that the continuous outflow of people from the country will negatively impact the economy:

• On the labor supply;
• On consumer demand;
• On GDP growth.

The return of Ukrainians is anticipated on the condition that the aforementioned problems are resolved, housing is restored, and the number of jobs increases due to economic recovery.

The report emphasizes that energy issues will also negatively affect production growth, provoke inflation, restrain economic development, and create risks for the heating season. Additionally, there will be significant expenditures on importing energy resources from abroad — $1 billion annually.

According to the report, alongside energy problems, inflation will also be influenced by tax increases currently being discussed by the Cabinet of Ministers and businesses.

“Increasing certain direct taxes will reduce inflationary pressure by limiting consumption. Consumption taxes contain more pro-inflationary risks, as their increase will directly reflect on consumer prices. Potentially introducing a war tax on business income poses pro-inflationary risks. Such a tax could significantly be passed on by businesses to consumers. The effect on prices could be multiplicative since taxation will occur at every stage of the production and distribution chain, except for vertically integrated companies. Introducing such a tax could substantially raise inflation in a relatively short period,” the National Bank of Ukraine’s analysis states.

Additionally, the National Bank of Ukraine reported that since the start of the full-scale invasion, international partners have provided Ukraine with $90 billion, of which just over $27 billion are non-repayable grants. The majority — $63 billion — are loans that will eventually need to be repaid.

Recently, it was reported that Ukraine ranked second in the world and first in Europe in terms of debt to the IMF. The war has also led to Ukraine having the largest budget deficit in the world.