ACTUAL

The EBRD reduced the forecast of Ukraine's economy growth by 2025

The European Bank for Reconstruction and Development (EBRD) revised its forecast for Ukraine's economic growth in 2025, reducing it to 3.5% of the previously expected 4.7%. This is stated in the EBRD report published on February 27, 2025. The reasons for this adjustment are the slowdown in economic growth, inflation pressure and long -term consequences of the war.

The EBRD notes that although Ukraine has begun 2025 with a secured external funding, it faces a number of challenges that affect its economic stability. The continuation of hostilities, including Russian attacks on critical infrastructure, has led to a shortage of electricity, which, in turn, led to an increase in the cost of imported electricity and increased costs for business and the population. In addition, the war created an acute labor deficit, which also had a negative impact on economic development.

During 2024, real GDP growth has slowed down significantly: from more than 5% in the first half of the year to about 2% in the second. The total GDP in 2024 was 3.0%, which indicates the instability of the economic situation and dependence on external factors.

Inflation remains one of the main problems for the economy. The restoration of inflationary pressure in the second half of 2024 was caused by several factors: increasing electricity tariffs, correction of regulated prices for utilities, rapid increase in real wages and weakening of the hryvnia after revision of the exchange rate in October 2023.

In December 2024, annual inflation reached 12% and, according to forecasts, will remain at the same level in the first half of 2025. However, it is expected to be gradually reduced to a clear indicator at the end of the year.

According to the EBRD, the budget deficit of Ukraine in 2025 will make 19.4% of GDP. It is planned to be completely covered by external funding in the amount of $ 38.4 billion. The main sources of these funds will be:

  • $ 13.7 billion from the EU within Ukraine Facility;
  • $ 22 billion from G7 countries attracted from income from frozen Russian assets;
  • $ 2.7 billion from the IMF.

Despite the negative factors that press on the economy, the EBRD notes several positive aspects that can contribute to its stabilization. In particular, the stability and adaptability of the Ukrainian business, the functioning of the maritime corridor, the increase in state consumption, and the increase in the procurement of military products by Ukrainian enterprises are important elements of support of the economy.

The National Bank of Ukraine also revised its GDP and inflation forecast. Economy growth is expected in 2025 will be 3.6% (against the previous forecast of 4.3%), and inflation will rise to 8.4% (previously expected 6.9%).

Thus, the economic development of Ukraine in 2025 will largely depend on the situation at the front, the stability of external financial support and the possibility of adapting the domestic market to new challenges.

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