IMF predicts when war in Ukraine could end

"The scenario continues to assume the war winds down by end-2025 and assumptions regarding energy sector developments and major policy objectives are maintained," the document states.

In particular, the baseline scenario includes the following:

• Ukraine's real GDP growth in 2024 is projected to be 4%, which is 1 percentage point higher than the IMF's October forecast.
• The economic impact of the winter energy deficit may be more limited than previously expected (despite recent attacks) due to business investments in their own generation capacities, increased import potential from Europe, and efforts to repair and install additional generation and distribution capacities.
• The inflation forecast for the end of the year has been raised by 1 percentage point to 10%, mainly due to continued pressure from rising prices for raw products, which has also affected key food-related goods, as well as the pass-through of wage growth and energy costs.

The revision of the baseline scenario for 2025 is minimal compared to October.

The forecast for real GDP growth remains unchanged at 2.5-3.5%, as the higher potential from faster energy capacity repairs in 2024 and new capacities in 2025 will be offset by the effects of a tighter labor market, which will support stronger income and consumption growth amid easing price pressures in the second half of the year.

The average inflation rate has been revised upward by 1.3 percentage points to 10.3%. It is expected that the mostly temporary inflationary pressure will ease, bringing inflation down to 7% by the end of the year.

In the medium term, forecasts for key economic variables have changed little. According to the recovery expectations, real GDP growth will increase in the years immediately following the war, before gradually approaching its potential of 4%; inflation will gradually converge to the NBU's target level of 5% by 2027 as inflation volatility related to the war subsides.

As a reminder, in October 2024, IMF experts updated their forecast for the duration of the Russian war against Ukraine, extending the timeline by one year. In the baseline scenario, the war will end at the end of 2025. In June, the IMF's baseline scenario forecast the war ending at the end of 2024, while the conclusion of the war at the end of 2025 was part of the fund's negative forecast.