IMF updates forecast: How long the war in Ukraine could last

"The war assumptions underpinning the program scenarios remain appropriate as peace discussions have yet to deliver tangible results," the IMF stated, adding that this creates divergent risks regarding the duration and intensity of the conflict.

However, the IMF’s current program has limited capacity to absorb new shocks, including a potential escalation or prolongation of the war, while still allowing time to implement reforms necessary for restoring external stability in the medium term, the Fund added.

GDP growth forecast for 2025

The GDP growth forecast for 2025 remains at 2–3% year-on-year. A lower-than-expected electricity shortfall is typically offset by increased gas imports resulting from reduced domestic production and weak agricultural exports.

Despite a revision of the state budget (with military spending raised by UAH 400 billion - Ed.), the IMF considers the impact minor due to the high share of imports. A stronger harvest in the second half of 2025 is expected to support economic growth.

Inflation is projected to decline to 9% year-on-year by the end of 2025, aided by a fading base effect in food prices and tight monetary policy.

The current account deficit, excluding grants, is forecast to increase by 1.7% of GDP in 2025 compared to the previous review. This reflects increased priority imports, higher gas imports, and lower agricultural exports.

Reserves and trade

Risks remain regarding the termination of the EU Autonomous Trade Measures for Ukraine, though these are mitigated by redirecting exports to other regions.
Ukraine’s international reserves are expected to reach $53.4 billion by year-end, which is below the previous forecast.
The main reasons for the decrease: widening current account deficit and postponement of external financing from 2025 to 2026.

Supplementary budget and defense spending

Defense spending needs for 2025 have grown, requiring the adoption of a supplementary budget. An increase in expenditures by 5.8% of GDP is planned, with the corresponding bill soon to be submitted to parliament, the document says.

War duration forecasts

As a reminder, in March, the IMF updated its baseline scenario, projecting that Russia's war against Ukraine will end by late 2025. This scenario anticipates Ukrainian economic growth of 2–3% in 2025, accelerating to 4.5% in 2026.

In June, the World Bank also updated its forecast, predicting Ukraine's economy will grow from 2.0% in 2025 to 5.2% in 2026. The growth acceleration reflects the World Bank's expectation that Russia’s invasion will continue until the end of 2025, after which active combat will begin to subside.