war's impact, including extensive damage to the energy system economic growth continued in h1 2024, but has decelerated in recent months, impeded by russia's attacks on energy infrastructure. however, businesses have partially 1 / 3 bis - central bankers'speeches adapted to rolling blackouts. the stable operation of the sea corridor has also provided significant support for economic activity. despite power shortages and smaller harvests compared to a year ago, the nbu has even slightly upgraded its economic growth forecast for this year, to 3. 7 %. this was made possible by better q1 results and an anticipated expansion of fiscal stimulus, as well as by the development of distributed generation with support from large - scale lending programs. the step - by - step normalization of economic activity and the steady pursuit of loose fiscal policy, combined with the development of export routes and the revival of external demand, will help speed up real gdp growth to 4 % – 5 % in 2025 – 2026. significant international financial aid will enable the government to finance the budget deficit, and the nbu to maintain a comfortable level of reserves under the forecast's baseline scenario, ukraine will keep receiving substantial external financing inflows. however, they will slowly decline with the growth in the internal capacity to use domestic resources to finance budget expenditures. international partners are expected to provide about usd 38 billion in soft loans and grants to ukraine this year, and no less than usd 31 billion next year. such volumes of external inflows, coupled with growing domestic borrowing, will make it possible to cover a significant budget deficit of about 23 % of gdp in 2024 and 18 % in 2025. for its part, the nbu will be able to maintain a sufficient volume of international reserves to ensure the sustainability of the fx market and moderate inflation. the course of the war continues to be the key risk to inflation dynamics and economic development the duration and nature of russia's aggression will continue to have a notable impact on ukraine's inflation and economic development. a prolonged high - intensity war will curb the economy's return to normal conditions and make it difficult to bring inflation to the nbu's target. there are other risks, most of which are also directly or indirectly related to the war, including : the emergence of additional budget needs, mainly those to maintain defense capabilities the pass - through to prices of certain new business taxes, the introduction of which is currently being discussed at the state level further damage to infrastructure

. over time, however, the tourniquet itself starts posing a threat and must be loosened up and then removed in order for the 3 / 6 bis - central bankers'speeches body to begin to recover. our second insight is about how to do this safely in the face of a war : 2. in times of uncertainty, strategic planning helps you stay on course. the war raged on with no quick ending in sight, and so the economy, businesses, and people had to adjust to operating under martial law. this required us to calibrate our toolkit. in effect, we had to invent monetary policy under wartime conditions. we had to find a new normal. so, how were we to proceed? strategic planning became our solution. it helped us identify the right signposts and answers. despite wartime uncertainty, we updated two key strategic documents : the nbu strategy and the strategy of ukrainian financial sector development. and then, jointly with imf experts, we developed the strategy for easing fx restrictions, transitioning to greater flexibility of the exchange rate, and returning to inflation targeting. the nbu strategy came to be called financial fortress, a name that refers to a certain level of strength and stability expected of us by stakeholders, financial sector participants, businesses, and households, meaning the end users of financial services or virtually everyone. gradually, by making step - by - step headway towards our strategic goals, we were able to achieve a point where the economy began to recover despite the war, and where the financial sector continued to undergo reform, because we could not afford put off our european integration efforts until after the war ended. 3. not only is the new reality forcing central banks to transform, but also it is motivating other institutions – governments and ifis – to do so. in 2023, the imf approved an eff program for ukraine that i really consider historic. not only because we managed to secure an unprecedented amount of financial assistance from partners. and not only because, under the program, ukraine is implementing an ambitious reform plan that strengthens its stability and capacity. the program was evidence of the imf's new perspective on reality. it set a precedent in which the imf reconsidered its own lending policies and opened up to the possibility of working with countries that face extremely high uncertainty generated by exogenous factors. the imf showed maturity and leadership in responding to the challenges posed by the new reality. another example of such a transformation