Unemployment, rising government debt, external aid problems, and the risk of emission: The National Bank of Ukraine has released a new inflation report

The National Bank of Ukraine has released a new inflation report. According to the document, mobilization to the frontlines and military migration of the population remain key factors in the labor market, leading to a shortage of qualified labor, particularly in the construction and manufacturing sectors.

This information reported on the official website of Bank.

However, during June-September 2023, unemployment in Ukraine increased to 45% (up from 40% in March 2022 and at the end of the year). According to surveys conducted by the “Rating” group, the situation is particularly dire in Eastern Ukraine, where the proportion of people without jobs is significantly higher (43% of those employed before February 24, 2022), mainly due to the proximity to the frontlines and the destruction of infrastructure and production facilities (the nationwide figure is 25%). Significant internal and external migration remains a crucial factor for the labor market. Temporarily displaced individuals still find it considerably more challenging to find employment compared to those who have not left their permanent place of residence.

The National Bank of Ukraine also reported that in the third quarter of 2023, some of those who had left the country at the outset of the full-scale invasion began to return, but fewer people returned than expected. The bank cites UN data indicating a decrease in the number of Ukrainian migrants from 6.3 million people in June 2023 to 6.2 million by the end of September. People’s reluctance to return is attributed to negative expectations of potential Russian attacks on Ukraine’s energy infrastructure, causing many to prefer spending the remainder of autumn and winter abroad.

According to the National Bank of Ukraine’s estimate, only 100,000 migrants will return to Ukraine in 2024, and 700,000 in 2025, even though some countries to which Ukrainians migrated have already announced the winding down of financial support programs for Ukrainians.

The National Bank of Ukraine noted a decrease in the current inflation rate to 7.1% and reiterated its forecast for the end of 2023 at 5.8% and for 2024 at 9.8%. Real wage growth for Ukrainians, according to the National Bank’s assessment, will remain relatively modest in 2024-2025, at just over 6% per year.