EBRD lowers Ukraine 2025 growth forecast to 2.5 per cent

• EBRD revises Ukraine 2025 growth forecast down to 2.5 per cent from 3.3 per cent
• Despite war, report says Ukraine has largely maintained macroeconomic stability
• EBRD forecast for 2026 unchanged at 5.0 per cent if fighting is suspended

Ukraine’s GDP growth is expected to slow to 2.5 per cent in 2025, amid high uncertainty related to Russia’s war on the country, says the latest edition of a flagship economic report by the European Bank for Reconstruction and Development (EBRD). The previous report, in May, had forecast 3.3 per cent growth in 2025.

However, the EBRD’s Regional Economic Prospects (REP), published today, keeps its real GDP growth forecast for Ukraine in 2026 unchanged at 5 per cent, assuming a ceasefire and benefits from post-war reconstruction.

“Ukraine’s economic outlook is highly uncertain, depending on the war’s course, energy security and continued international support. The government remains committed to macroeconomic discipline and structural reforms, aiming to mobilise public revenue, increase investment, improve governance of state-owned enterprises and strengthen resilience of the financial sector,” it says.

Real GDP grew by 0.9 per cent year on year in the first quarter of 2025, driven by consumption and critical infrastructure investment, the report said, but added that labour shortages, damage to the energy infrastructure and weak agricultural exports continue to constrain growth.

The unemployment rate has dropped to a wartime low of 12 per cent, but recruitment remains difficult due to mobilisation and emigration.

The current account deficit widened by almost 50 per cent in the period January to July 2025, reflecting high military and energy imports and weak exports. The fiscal deficit is expected to reach 22 per cent of GDP in 2025, with about US$ 40 billion in external financing—much of it sourced from the EU, G7 (using income from frozen Russian assets) and the IMF.

Inflation remains high, driven by food prices, utilities and rising real wages, but is gradually easing, declining from 15.9 per cent in May to 13.2 per cent in August 2025.

The central bank has kept its policy rate at 15.5 per cent since March 2025 with the view to moderate inflation, while foreign reserves reached US$46 billion in August 2025—covering 5.5 months of imports and supporting exchange rate stability.

The EBRD, Ukraine’s largest institutional investor, has significantly increased its support in response to the war. The Bank has made nearly €8.4 billion available to Ukraine since the full-scale war began in February 2022, including €3 billion to the energy sector, supporting the real economy by its work on energy security, vital infrastructure, food security, trade and the private sector.