EBRD cuts Ukraine's 2025 GDP growth forecast to 2.5%

The European Bank for Reconstruction and Development (EBRD) has lowered its forecast for Ukraine's real GDP growth in 2025 from 3.3% to 2.5%, while keeping its 2026 forecast unchanged at 5.0%, assuming Russia's war against Ukraine ends.

"Ukraine's GDP growth is expected to slow to 2.5% in 2025 amid high uncertainty linked to Russia's war against the country," the bank said in its latest flagship economic report.

Across the regions where it operates, the EBRD projects overall growth of 3.1% this year, accelerating to 3.3% in 2026, compared with earlier forecasts of 3.0% and 3.4%, respectively.

The bank noted that Ukraine's economic outlook remains 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, aiming to mobilize public revenues, boost investment, improve governance of state-owned enterprises, and strengthen the resilience of the financial sector," the bank stated.

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

Unemployment has fallen to a wartime low of 12%, but hiring remains difficult due to mobilization and emigration.

The current account deficit widened by nearly 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 about $40 billion in external financing, much of it from the EU, the G7 (including revenues from frozen Russian assets), and the IMF.

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

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

The EBRD is Ukraine's largest institutional investor. Since the start of Russia's full-scale invasion in February 2022, it has provided nearly EUR 8.4 billion to Ukraine, including EUR 3 billion for the energy sector.