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International Monetary Fund. European Dept.
Real GDP growth is expected to strengthen further in 2025 after a moderate recovery in 2024. Supportive policies and recovering real incomes will boost private domestic demand as inflation has been successfully brought under control. Real GDP growth is projected to rise to 1.9 percent in 2025. However, the external environment is turning less supportive, amid ongoing geo-economic fragmentation, while slower productivity growth and an aging population are dampening potential growth.
International Monetary Fund. European Dept.
This paper presents Seventh Review under the Extended Arrangement under the Extended Fund Facility (EFF), Requests for Modification of a Performance Criterion, Rephasing of Access, and Financing Assurances Review. Ukraine’s economy remains resilient, and performance remains strong under the EFF despite challenging conditions. The authorities met all end-December and continuous quantitative performance criteria, the prior action for this review, and the majority of structural benchmarks. Sustained reform momentum, progress at domestic revenue mobilization, as well as full and timely disbursement of external support during the program period, is necessary to safeguard macroeconomic stability, restore fiscal and debt sustainability, and improve governance. While the financial sector remains stable, vigilance is needed given heightened risks. Institutional weaknesses in the security markets regulator need to be tackled. Looking ahead, improving Ukraine’s capital markets infrastructure will be one of the key steps to attracting foreign capital for reconstruction.
International Monetary Fund. European Dept.

On behalf of the Ukrainian authorities, I would like to express their deep appreciation to the IMF staff for the in-depth report, the constructive engagement during the recent mission to Kyiv and Warsaw, and the continued virtual dialogue with the authorities.

International Monetary Fund. European Dept.

1. Russia’s full-scale war in Ukraine has now lasted over three years. Ukraine has been under intensified pressure on the Eastern frontlines, while continued aerial attacks on civilian and energy infrastructure are taking a severe humanitarian toll. More than 6.9 million refugees remain outside Ukraine, on top of the 3.7 million internally displaced persons. The updated World Bank Rapid Damage and Needs Assessment (RDNA4) estimates reconstruction and recovery needs of US$524 billion, significantly above last year’s assessment. Nevertheless, the Ukrainian economy and its people remain resilient, thanks in part to sustained donor support, a robust energy situation, and the authorities’ perseverance in maintaining macroeconomic and financial stability while advancing structural reforms, including on the path to the EU accession.

International Monetary Fund. Communications Department

THE BIG PICTURE: Barbados’s economy grew at an annual pace of 3.9 percent in the first nine months of 2024 as tourists flocked to the Caribbean island’s white-sand beaches. Labor market conditions improved, with unemployment falling to the lowest rate since 2008. Above, a racehorse from the Garrison Savannah racetrack swims with its groom in the early morning at Pebbles Beach, outside Bridgetown. IMF Photo/Kim Haughton.

International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper explores the scope of recalibration to deal with Thailand’s debt. Thailand’s debt ceiling plays a central role in safeguarding fiscal prudence. Fiscal framework provides necessary flexibility to respond to shocks, but at the cost of weakened expenditure control. This paper assesses Thailand’s debt ceiling and discusses policy implications. The analysis suggests that Thailand’s debt limit ranges between 80-110 percent of gross domestic product (GDP). The analysis shows that growth-maximizing debt levels for Thailand would range between 31 to 77 percent of GDP. Overall, the analyses indicate that the debt limit for Thailand would depend importantly on outcomes for growth, interest rate and capacity for fiscal adjustment. The results show that Thailand’s current debt ceiling is broadly consistent with the debt limit and the safety margin. However, a larger safety margin is required if contingent liabilities and additional spending needs are considered. Increasing frequency of shocks and the need for potentially larger counter-cyclical fiscal policies would further reduce the required debt ceiling.
International Monetary Fund. European Dept.
This Selected Issues paper discusses perspectives on the Czech Republic’s structural productivity slowdown. The Czech economy has underperformed European peers in the post-pandemic period and economic convergence has come to a halt. This outcome is often attributed to the country’s links to specific slow growing trading partners and to its energy-intensive economic structure. A decline in productivity, along with a slower increase in the labor force has been a crucial factor. The paper focuses specifically on the challenge posed by declining productivity, uncovering multifaceted factors and dynamics at play. Empirical analysis suggests that further R&D investment could reduce gaps with the total factor productivity frontier, sector-specific bottlenecks should be addressed, and productivity-enhancing labor reallocation could be better supported by more targeted policies. Though structural transformation may be inevitable, it does not need to adversely affect productivity as observed in recent years. The Czech Republic may evolve towards a more mature, diversified economy with certain services playing an increasingly significant role.