MACROECONOMIC FORECASTS IN THE CONTEXT OF THE WAR IN UKRAINE: CAUTIOUS OPTIMISM VS. HOPEFUL PESSIMISM

Abstract

How different variants of security risk shape the future of the Ukrainian economy? The war background with its built-in uncertainty factor makes the development of accurate forecasts more challenging. The paper proposes to solve the problem of short-term and medium-term forecast accuracy of macroeconomic indicators of Ukraine in the context of the war based on the use of a scenario approach. Four hypothetical scenarios regarding the development of socio-economic situation in Ukraine ranging from optimistic to pessimistic variants due to duration of large-scale war have been designed. Real GDP growth, net migration, volume of remittances and unemployment rate are the key macroeconomic measurements that have been projected for 2023-2024 period. Research findings form the basis for shaping a clear strategy for the post-war recovery of Ukraine in the medium to long term as three out of four macroeconomic scenarios assume the end of hostilities within a period under forecast. The paper contributes to improved theoretical rationale for existing linkages between key macroeconomic indicators and uncertainty factor driven by military situation in economic projections. The implications of the research include the design of economic policy mix adequate for optimistic and pessimistic scenarios of the development of the war in Ukraine.

Keywords: GDP growth; forecast; scenario approach, inflation, migration