Economic growth in Ukraine in Q1 2025 amounts to 1.1% - IER

The real gross domestic product (GDP) of Ukraine in January-March 2025 grew by 1.1% compared to the same period in 2024, according to the Monthly Economic Monitoring of the Institute for Economic Research and Policy Consulting (IER).

"The figures published by the State Statistics Service on GDP, industry, construction and a number of other economic sectors allowed IER experts to clarify the estimate of real GDP growth in the first quarter of 2025. According to our estimate, real GDP grew by 1.2% in January and 0.7% in February," the IER press service said on Tuesday.

It is noted that better access to electricity in March and a gradual increase in demand were the main reasons for a certain improvement in the economic situation in March. According to the IER estimate, real GDP in March grew by 1.3%.

Value added in agriculture decreased by approximately 3% compared to the previous year in March, which corresponds to the revised estimate for February. The IER explained that this was mainly due to a decrease in livestock production in households. As before, the advance of Russian troops led to a decrease in production near the front line.

"According to our estimates, real gross value added (GVA) in industry grew by 2.5% year-on-year in March, slightly faster than the revised 1.8% in February. Moderate growth in domestic demand and export deliveries supported the increase in production, although Russian attacks continued to negatively affect economic activity. Thus, attacks on such large cities as Dnipro, Kryvy Rih, and Kharkiv intensified in March," the institute added.

According to the IER, production in the extractive industry in March decreased by more than 3% compared to March 2024, primarily due to the temporary occupation of several coal mines in Donetsk region by Russian troops and attacks on gas production. Real GVA in the electricity sector decreased by almost 5%, which was due to Russian attacks.

The IER emphasized that it also revised its estimate of trade growth to 0.7% in February (compared to February 2024). The organization expects that growth in March will remain close to the same level of 1.2%.

"This will continue to reflect the trend of an increase in the share of direct sales in trade, which leads to a decrease in wholesale trade. According to our estimates, real GVA in transport in March decreased by 6%, which is close to our revised estimate for February. A deeper slowdown in rail freight due to cyberattacks offset slightly faster growth in other transport segments. The impact of the suspension of gas transit also remained," the IER emphasized.