Economic Monitor Ukraine
Ukraine’s economy grew by 3.5% in 2024, driven by domestic demand but constrained by destructions in the energy sector. In 2025, 2026 economic growth is projected to reach 2.9% and 3.2%. Private consumption and investment will be key drivers. However, export growth will remain constrained, while imports are expected to expand. Nevertheless, the current account is projected to remain balanced in 2025, supported by the planned USD 50 bn financing under the G7 Extraordinary Revenue Acceleration Loans (ERA) initiative, before returning to a deficit in 2026. Inflation is forecast to remain in double digits on average in 2025. However, in 2026, with an improved agricultural harvest and a slowdown in energy price growth, inflation is expected to approach the National Bank’s target range.
Overview
- Ukraine’s economic growth will moderate to 2.9% in 2025, after 3.5% in 2024
- Consumption and investment are the main drivers, war damages and labour shortage are brakes
- Rising inflation expected to peak in mid-2025, target to be reached only in 2026
- New USD 50 bn ERA funds will balance the CA in 2025, but return to deficit in 2026
- Controlled depreciation allows building up FX reserves
- Budget deficit financing remains challenging.International financial aid to be partly used for military equipment purchases
- Public debtto peak in 2024, and is expected to decline during 2025/2026
- New Black Sea corridor positively affects exports, but imports continue to grow stronger
Special issues
- Reconstruction needs: Total sum of USD 524 bn; immediatereconstruction needs lack financing
- Situation in the energy sector challenging: while blackouts were limited so far, prices increased
- International support tracker: Allocations by US and EU now roughly on the same level
