ICU predicts slowdown in Ukraine's GDP growth in 2026 to 1.2%
ICU Investment Group predicts slowdown in Ukraine's real GDP growth in 2026 to 1.2% from 2.1% in 2025, while in July the company predicted GDP growth of 2.5% this year and 2.8% next year.
"Macroeconomic risks under control, but economic recovery is slow," says the updated ICU macroeconomic forecast, published on Tuesday.
ICU noted that the European Union’s (EU) decision to provide a loan to Ukraine is intended to create conditions for macroeconomic stability, finance the budget deficit, and support the National Bank’s reserves in 2026-2027. It also lays the groundwork for implementing a new cooperation program with the International Monetary Fund for at least the next two years.
At the same time, to fully cover defense needs, the investment group believes that Ukraine will require additional bilateral loans and grants.
ICU expects that economic growth will slow primarily due to damage to energy and transport infrastructure from Russian attacks, electricity shortages, and complications with maritime exports, which will result in temporary shutdowns of large-scale production.
Additional constraining factors include a gradual reduction of the state budget deficit and fiscal stimulus, as well as delays in business investments due to high security risks. Private consumption is expected to remain the key driver of growth.
According to ICU’s forecast, annual inflation will reach 6-7% by the end of 2026, and the National Bank of Ukraine will begin easing monetary policy at the end of January, with a cumulative reduction of the key policy rate by 200 basis points over the year – to 13.5%.
According to the company, the National Bank of Ukraine is expected to slightly weaken the hryvnia in 2026 amid slowing inflation and rising external imbalances. The hryvnia-dollar exchange rate is forecast at UAH 44.3/$1 by the end of next year, slightly stronger than the July forecast of UAH 44.9/$1. Reserves are expected to remain at record levels thanks to EU funding.
ICU estimates that by the end of 2025, inflation will reach 8.3%, the exchange rate will be UAH 42.4/$1, international reserves will total $53.1 billion, the current account deficit will be 18.2% of GDP, the budget deficit (excluding official grants) will be 22% of GDP, and public debt will reach 101% of GDP.
For 2026, the company forecasts inflation at 6.3%, international reserves at $52.3 billion, a current account deficit of 16.8% of GDP, a budget deficit of 19% of GDP, and public debt at 109% of GDP.