Due to war-related risks: EBRD has downgraded its forecast for Ukraine’s economic growth
3 June 13:15
Due to the protracted war, the European Bank for Reconstruction and Development has lowered its forecast for Ukraine’s real gross domestic product growth in 2026 to 2.2%, but notes that macroeconomic stability has been maintained thanks to external support. This is reported by "Komersant Ukrainian", citing Interfax-Ukraine.
“This is slightly lower than the 2.5% forecast published in February, but if hostilities subside and post-war reconstruction begins, the forecast for 2027 remains unchanged at 4.0%,” the EBRD’s “Regional Economic Outlook” report states.
The bank emphasizes that Ukraine is maintaining macroeconomic stability even in the fifth year of Russia’s aggressive war thanks to significant external financing. The outlook continues to depend largely on the course of the war and the availability of external financial support.
“The main downside risk to the forecast is linked to the energy crisis caused by the conflict in the Middle East, which could significantly worsen Ukraine’s already unstable energy situation,” the report states.
The EBRD attributes the slowdown in economic growth to 1.8% in 2025 and the weak start this year to ongoing wartime constraints: labor shortages and persistent attacks on energy infrastructure have disrupted industrial activity and logistics, while broader supply chain issues have limited production.
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The bank notes that inflation has also begun to rise again after slowing to 7.4% in January 2026 following a period of tighter monetary policy and relative exchange rate stability. Higher global energy prices linked to the conflict in the Middle East are adding new pressure, increasing costs for businesses and households and contributing to a resurgence of inflationary momentum.
According to the EBRD, fiscal support remains crucial. Ukraine’s budget deficit, excluding grants, reached 23.6% of GDP in 2025 and is projected to remain elevated at 19.3% of GDP in 2026, reflecting exceptionally high spending on defense and social services. These needs are financed largely through official external support, which continues to underpin macroeconomic stability. The allocated external financing of over EUR110 billion for 2026–27 is expected to mitigate short-term risks.
The Bank notes that it is Ukraine’s largest institutional investor and has significantly increased its support in response to the full-scale war: since its onset in February 2022, the EBRD has allocated nearly EUR10.0 billion to Ukraine.
As reported, the National Bank lowered its GDP growth forecast for this year to 1.3% from 1.8% in April.
The government’s forecast, included in the 2026 state budget, currently projects 2.4% growth, but Economy Minister Oleksiy Sobolev recently announced plans to revise it downward.
According to the State Statistics Service, Ukraine’s GDP growth slowed to 1.8% in 2025 from 2.9% in 2024 and 5.5% in 2023, following a 28.8% decline in 2022—the first year of full-scale Russian aggression.
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