Low economic growth and price hikes: EU Commission worsens forecast for Ukraine

The GDP growth forecast for 2025 has been downgraded to 2.0% from 2.8% in November 2024. For 2026, the forecast was downgraded to 4.7% from 5.3%.

Source: EU Commission

The report says that in 2025, economic activity is projected to slow further to 2.0% as the war continues to put strong pressure on Ukraine's productive capacity and business sentiment.

The EC expects exports to weaken, reflecting subdued industrial production, especially in energy-intensive sectors affected by high energy prices and the closure of the Pokrovsk coal mine, a key supplier to the steel industry.

Inflation is projected to rise to 12.6% in 2025 due to sharp increases in energy and labor costs, before easing in 2026 as supply-side pressures ease.

Stronger economic growth is projected from 2026 onwards, which will further improve revenue collection, while a gradual shift in spending from military to recovery and reconstruction will contribute to a significant reduction in the deficit.

According to the EC, after sustained growth that lasted until early 2024, Ukraine's economy began to lose momentum in mid-2024, reflecting increased Russian attacks on critical infrastructure, a weaker agricultural harvest due to unfavorable weather conditions, and a severe labor shortage that continued to limit economic activity.

Source: EU Commission

Forecasts

According to the State Statistics Service, Ukraine's GDP growth slowed to 2.9% in 2024. The GDP growth forecast included in the 2025 budget is 2.7% per year.

In April, the National Bank of Ukraine downgraded its forecast for Ukraine's real gross domestic product (GDP) in 2025 to 3.1%.

In April, the IMF downgraded its forecast for Ukraine's economic growth in 2025 to 2.0%, down from 2.5% in its October forecast.