Growth in the Ukrainian economy is expected to slow this year, according to a leading think tank for eastern European economies.

The Vienna Institute for International Economic Studies (wiiw) said on Tuesday it had lowered its growth forecast for the country in 2024 by 0.5 percentage points to 2.7 per cent.

At the same time, the institute revised its outlook for the Russian economy upward, despite the impact of wide-ranging Western sanctions.

The institute predicted that Russia will grow by 3.2 per cent a similar rate to 2023.

However, acute labour shortages and high interest rates will limit the Russian economy’s growth to around 2.5 per cent in the coming years, according to Wiiw.

The report said around a third of Russia’s federal budget—some 6 per cent of GDP—is channelled into the war economy.

High wages for front-line soldiers and payments to injured veterans and surviving dependents would lead to a redistribution of wealth from the top to the bottom.

It would promote sympathy for the war among the population, said a Russia expert at Wiiw.

The institute believed that the economies of most Central, Eastern and south-eastern European countries would gain momentum in 2024.

Countries in the region that are also EU members would show particularly robust growth, the institute said.

Poland is leading the way in terms of growth among the eastern EU members, with a projected 3.3 per cent this year and 3.6 per cent next year.

Romania (3 per cent) and Croatia (3 per cent) will also grow strongly in 2024, according to Wiiw.

(dpa/NAN)