EBRD revises Ukraine 2025 growth forecast down to 3.3% from 3.5%
The European Bank for Development and Reconstruction (EBRD) has revised down its forecast for Ukraine's real GDP growth in 2025 to 3.3% from the 3.5% it expected in February, and kept its forecast for 2026 unchanged at 5.0%, assuming a ceasefire in Russia's war against Ukraine and benefits from post-war reconstruction.
"Global trade pressures as well as war weighing on 2025 economic expectations. Ukraine's GDP growth is expected to slow to 3.3 per cent in 2025, with recent global trade frictions adding additional downside risks to already 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) – Regional Economic Prospects (REP).
Stable external financing from the EU under the Ukraine Facility and revenue from Russian frozen assets provided by G7 countries will fully cover external and fiscal deficits in 2025, underpinning macroeconomic stability. The strong stimulus from public consumption and increasing military purchases from domestic industry are expected to support economic growth.
The bank said that it has seen a slowdown in economic growth, and accelerating inflation, since the middle of 2024 due to the impact of the war that began with the Russian invasion of February 2022.
The EBRD said that real GDP growth in 2024 slowed markedly from over 5.0 per cent in the first half of the year to around 2.0 per cent in the second half, bringing the overall figure down to 2.9 per cent. Causes included electricity shortages resulting from Russian attacks, weak harvests and acute labour shortages in the economy caused by the demands of the war.
"While agriculture, energy production, and trade declined, other sectors exhibited solid growth despite challenging conditions and the war. Businesses demonstrated resilience and adaptability, which, coupled with the take-off during 2024 of Ukraine's Black Sea trade corridor, led to the resumption of export growth after two years of sharp declines," the bank added.
Across the EBRD regions – central and eastern Europe, Central Asia and the Southern and Eastern Mediterranean (SEMED) – average growth slowed from 3.4 per cent in 2022 to 2.7 per cent in 2023 and remained broadly stable at 2.8 per cent in 2024.
"But a sharp rise in trade and economic policy uncertainty in 2025, caused by increased global policy uncertainty, weaker external demand and the direct and indirect impact of announced increases in import tariffs, has prompted the EBRD to lower its regional May forecast for this year by 0.2 percentage points to an average of 3 per cent, before picking up next year to 3.4 per cent in 2026, unchanged from February," the EBRD said.
As reported, in February, the EBRD worsened its GDP forecast for Ukraine this year from 4.7% to 3.5%.
Then, the International Monetary Fund (IMF) also revised its forecast for Ukraine's economic growth in 2025, reducing it by 0.5 percentage points compared to the previous forecast – to 2-3%, and the World Bank – from 6.5% to 2%.
Finally, in April, the NBU worsened its forecast for Ukraine's economic growth this year to 3.1% from 3.6% in the previous January macroeconomic forecast, and next year – from 4.0% to 3.7%.