Due to the full-scale Russian military invasion, the economic situation in Ukraine is deteriorating. The rating agency predicts a 33% contraction in the country's economy in 2022 with a slight recovery of 4% in 2023. Amid war and collateral losses, Fitch downgrades Ukraine's Long-term Foreign Currency Issuer Default Rating to 'C' from 'CCC'. While a 'D' rating actually means default.

Recently, on July 20, the government of Ukraine officially announced its agreement to defer the repayment of external debt for two years.. Fitch considers the situation as corresponding to the ratings "

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Ukrainian foreign exchange reserves, during the four months of the war, decreased to $22.8 billion, as of the end of June, from $28.1 billion at the end of March. This was partly due to the outflow of $9.1 billion associated with trade loans and cash withdrawals by refugees abroad..

Ukraine's record high budget deficit.

In the second quarter of this year, the monthly deficit averaged 4 billion. Fitch forecasts 29.1% of GDP for the year. In the next 2023, the agency also foresees a high deficit of 22.4% of GDP due to the constant need to finance the war and rebuild critical infrastructure..

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Among other negative factors, Fitch notes the rapid growth of public debt and inflation.

Formerly ZN. UA reported that in November-December in Ukraine there may be 75% inflation.