EBRD downgrades Ukraine's GDP growth forecast

“Ukraine's GDP growth is expected to slow to 2.5% in 2025 amid high uncertainty related to Russia's war against the country,” the EBRD report says.

Overall, in the regions where the EBRD operates, it forecasts economic growth of 3.1% this year and an acceleration to 3.3% in 2026, whereas it had previously expected growth of 3.0% and 3.4%, respectively.

Ukraine's economic outlook is highly uncertain and depends on the course of the war, energy security, and continued international support.

The government remains committed to macroeconomic discipline and structural reforms, seeking to mobilize state revenues, increase investment, improve the management of state-owned enterprises, and strengthen the resilience of the financial sector.

Real GDP grew by 0.9% year-on-year in the first quarter of 2025, driven by consumption and investment in critical infrastructure, but labor shortages, damage to energy infrastructure, and weak agricultural exports continue to hold back growth.

The unemployment rate fell to a wartime low of 12%, but recruitment remains difficult due to mobilization and emigration.

The EBRD notes that Ukraine's current account deficit grew by almost 50% in January-July, reflecting high imports of military and energy products and weak exports. The budget deficit is expected to reach 22% of GDP in 2025, with external financing amounting to about $40 billion, a significant portion of which comes from the European Union, the G7 (using revenues from frozen Russian assets), and the International Monetary Fund.

Inflation remains high, driven by food and utility prices and real wage growth, but is gradually declining, from 15.9% in May to 13.2% in August 2025.

The central bank has kept its policy rate at 15.5% since March 2025 in an attempt to ease inflation, while foreign exchange reserves reached $46 billion in August, covering 5.5 months of imports and supporting exchange rate stability, the bank added.

Photo: Ministry of Finance.