EBRD lowers Ukraine's growth forecast
Photo: EBRD downgrades outlook for Ukraine (Getty Images)
The European Bank for Reconstruction and Development (EBRD) has revised its economic growth forecast for Ukraine for 2025. GDP growth is now expected to be 2.5% instead of the previously forecast 3.3%.
The downward revision is due to high uncertainty caused by Russia's war against Ukraine. At the same time, the EBRD has left its forecast for 2026 unchanged at 5%, assuming that hostilities cease and post-war recovery begins.
Growth of 3.1% is expected in the bank's region in 2025, increasing to 3.3% in 2026.
Macroeconomic stability despite war
The report notes that Ukraine has managed to maintain macroeconomic stability even in the context of war.
"Ukraine’s economic outlook is highly uncertain, depending on the war’s course, energy security and continued international support," the document says.
The authorities continue to adhere to the principles of fiscal discipline and implement structural reforms. The goal is to increase budget revenues, stimulate investment, improve the management of state-owned enterprises, and strengthen the financial sector, according to the EBRD.
Growth and constraints
According to the EBRD, Ukraine's economy grew by 0.9% year-on-year in the first quarter of 2025. This was driven by domestic consumption and investment in critical infrastructure.
However, growth is constrained by labor shortages, damage to energy infrastructure, and weak agricultural exports. Unemployment has fallen to a wartime low of 12%, but employment remains difficult due to mobilization and emigration.
Deficit and inflation
From January to July, Ukraine's current account balance increased by almost 50%. This is due to high imports of military and energy products against the backdrop of weak exports.
The budget deficit in 2025 is forecast to reach 22% of GDP. To cover it, it is planned to attract about $40 billion (€34 billion) of external financing, mainly from the EU, G7 countries, and the IMF, the bank notes.
Inflation is gradually slowing down, from 15.9% in May to 13.2% in August. It continues to be driven by rising food prices, utilities, and wages.
According to the EBRD, the National Bank of Ukraine has kept its key policy rate at 15.5% since March 2025, curbing inflation and maintaining exchange rate stability. International reserves reached $46 billion in August, covering 5.5 months of imports.
The National Bank of Ukraine (NBU) forecasts Ukraine's real gross domestic product (GDP) to grow by 2.1% in 2025.
The IMF expects Ukraine's economy to grow by 2-3% in 2025.
