Financial sector news

The European Bank for Reconstruction and Development (EBRD) has lowered its forecast for Ukraine's real gross domestic product (GDP) growth in 2025 from 3.3% to 2.5%, while leaving its forecast for 2026 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 related to the war,” the latest edition of the EBRD's flagship economic report says.

For the regions where the bank operates, expected economic growth this year is 3.1% and 3.3% in 2026 (previously forecast at 3.0% and 3.4%, respectively). Ukraine's economic outlook, according to the bank's assessment, remains highly uncertain and depends on the course of the war, energy security, and international support.

The EBRD notes the Ukrainian government's commitment to macroeconomic discipline and structural reforms aimed at mobilizing state revenues, increasing investment, improving the management of state-owned enterprises, and strengthening the financial sector.

According to the bank, Ukraine's real GDP grew by 0.9% in the first quarter of 2025 thanks to consumption and investment in critical infrastructure. At the same time, labor shortages, damage to energy infrastructure, and weak agricultural exports are holding back economic growth.

The unemployment rate fell to 12%, a wartime low, but recruitment remains difficult due to mobilization and emigration. Ukraine's current account deficit grew by almost 50% in January-July, due to high imports of military and energy products and weak exports. The budget deficit is expected to reach 22% of GDP in 2025, with external financing amounting to around $40 billion, mainly from the EU, G7 countries, and the IMF.

Inflation remains high due to rising food prices, utilities, and real wages, but is gradually declining, from 15.9% in May to 13.2% in August 2025. The central bank has kept its policy rate at 15.5% since March 2025. Foreign exchange reserves have reached $46 billion, covering 5.5 months of imports and supporting exchange rate stability.

The State Statistics Service reported that GDP growth slowed to 0.8% in the second quarter of 2025 from 0.9% in the first quarter. The NBU lowered its economic growth forecast for 2025 to 2.1% (previously 3.1%), while the Ministry of Economy and the government lowered it to 2%. Economy Minister Oleksiy Sobolev expects growth of 2%. For 2026, the NBU forecasts GDP growth of 2.3%, while the government forecasts 2.4%.

In 2024, Ukraine's economy grew by 2.9% after 5.5% in 2023 and a 28.8% decline in 2022, the first year of Russia's full-scale aggression.

The EBRD is Ukraine's largest institutional investor: since the start of the full-scale invasion in February 2022, the bank has allocated almost €8.4 billion to Ukraine, including €3 billion to the energy sector.