Economic situation in 2025: how much will the dollar cost, what will be the inflation rate, and how much will taxes increase
31 December 2024 13:04
The third year of the full-scale war is underway, and it has been a tough test for the Ukrainian economy. However, despite the many difficulties, it continues to function and even has a certain reserve of resilience for the next year.
Ilya Neskhodovskyi, Head of the Analytical Department of the Network for the Protection of National Interests of the ANTS , exclusively for
GDP growth
According to the expert, Ukraine’s GDP may grow by 3.5-3.7%. Although this is not a very high figure, given that the economy is currently only 75-77% of its pre-war level, the growth is still a positive trend.
“This growth, of course, is not too high, given the significant part of the economy that has been lost, but it is still a positive result,” Neskhodovsky said.
The destruction of thermal power plants as a result of Russian attacks on energy infrastructure played a special role in the rise in the cost of energy resources. In the summer of 2024, the destruction of these facilities reached 86%, which led to a significant increase in the cost of electricity for businesses and households.
“An increase in the cost of electricity by more than 70% has led to an increase in prices for energy-dependent products, such as dairy products and other food products,” the expert explained.
The main factors of inflation
Ilya Neskhodovsky notes that high inflation in Ukraine in 2024 is the result of three main factors:
- Rising electricity costs: Due to the increase in tariffs, prices for energy-dependent goods have risen.
- Unfavorable weather conditions: A dry summer resulted in lower crop yields, which affected food prices.
- National currency devaluation: The hryvnia depreciated by 14% over the year, which also contributed to higher prices for imported goods.
“The dollar is now worth about 42 UAH, which is the result of a significant trade deficit and periodic delays in international aid,” said Neskhodovsky.
Forecast for 2025: Macroeconomic stability
Despite the challenges, Ukraine’s economic situation in 2025 looks relatively stable. As businesses have adapted to the new environment, many of them have bought generators to ensure continuous operation, and the economy is starting to stabilize.
“We expect inflation to decline in 2025. As the sea corridor is working and oil prices remain low, this will help reduce energy costs,” the expert predicts.
To ensure the stability of the hryvnia, Ukraine continues to receive significant international support. The United States plans to allocate $20 billion, and the European Union will provide Ukraine with $1.5 billion monthly in 2025.
“The total amount of assistance to be provided to Ukraine next year may reach up to $50 billion. This will cover all of Ukraine’s needs, including budget support and economic development,” Neskhodovsky said.
Impact of the tax reform on the Ukrainian economy
According to Neskhodovsky, the tax reform being implemented in Ukraine may have a negative impact on demand among the population. This could lead to a decline in domestic consumption and, consequently, a slowdown in GDP growth.
“The decline in the purchasing power of the population may contribute to a decline in domestic demand, which in turn may affect economic growth, in particular, sales in the domestic market,” said the head of the analytical direction of the ANTS.
According to the expert, in 2025, Ukraine can expect stable macroeconomic development with a projected GDP growth of 3-4%. Inflation is likely to decline and devaluation will be limited. However, there are still external risks, such as shelling and the situation at the frontline, which could have an unpredictable impact on the economic situation.
“2025 should be a year of gradual stabilization, although much will depend on the situation at the front and the decisions of international partners,” says Neskhodovskyi.
Meanwhile, Oleh Hetman, coordinator of the Economic Expert Platform, spoke to journalists
“The economy is growing by 4%, which is a very good indicator given the fact that a full-scale war is going on,” Hetman added.
What is wrong with the National Cashback and the thousand from the state
Oleh Hetman emphasized some government initiatives in 2024 that, in his opinion, have negative consequences for the economy. In particular, he was critical of the national cashback program for buyers. The expert believes that this step will not change the consumer habits of Ukrainians and will not have a significant economic effect.
“It was a poor decision for several reasons. First, the money could have been spent much more efficiently. And secondly, people who have been buying Ukrainian goods will continue to do so. Those who chose foreign goods will not give them up because of the 10% cashback. This does not change the mood of the population and does not benefit the economy,” emphasizes Hetman.
He also criticizes the decision to pay thousands of hryvnias to citizens, noting that these funds could be spent with greater benefit, in particular to support low-income groups or on effective programs.
In general, Oleg Getman notes that economic decisions made by the government should be more strategic and focused on long-term development.
“These funds could be spent on supporting economic growth and strengthening defense capabilities rather than on short-term solutions,” he emphasizes.
How much will the dollar cost in 2025?
In terms of the exchange rate for 2025, Hetman predicts its fluctuations in the range of 42-44 UAH per dollar, with gradual devaluation.
“We expect the exchange rate to be at UAH 44 by the end of the year. It will be a slow devaluation due to the large trade deficit that needs to be corrected,” he adds.
According to the expert, an important task for the National Bank will be to support exporters and reduce imports. At the same time, Mr. Hetman emphasizes that the situation at the frontline may have unpredictable consequences for the economy. “The only factor that can significantly affect the economic situation is the frontline. A war of attrition or a change in circumstances in the international arena.
These statements are supported by Andriy Novak, Chairman of the Committee of Economists of Ukraine, who emphasizes that the situation at the front will remain the main factor determining economic development.
“The forecast for 2025 is most closely related to how the situation at the front will develop, how long the war will last, and what its intensity will be. Economic life in Ukraine depends on this,” he said.
Novak emphasized that Ukraine will continue to receive substantial assistance from international financial institutions and governments that support Ukraine next year.
“Regardless of the budget deficit, our partners will help us cover it,” he said. He also noted that if necessary, the National Bank will be able to replenish its foreign exchange reserves to maintain the stability of the hryvnia.
Tax policy
Regarding tax policy, Novak emphasized that the budget for 2025 does not currently provide for any tax increases. However, he does not rule out the possibility of changing this policy during the year.
“It is possible that next year we will consider a tax increase. It all depends on the conditions of our international partners who support Ukraine,” he said.
If the partners demand that Ukraine raise budget revenues, the government will probably be forced to take such measures.
Positive forecasts for 2025
Despite the unpredictability of the situation at the front, Andriy Novak expressed positive expectations for economic development in 2025. He believes that the trends at the front are gradually going in Ukraine’s favor.
The economist is also confident that military and financial assistance to Ukraine will increase in 2025, allowing the country to approach a strategic turning point.
Thus, the outlook for Ukraine’s economy in 2025 remains cautious, given the military and political factors. However, international support, a stable foreign exchange market, and moderate inflation forecasts give hope for a gradual stabilization of the economy. At the same time, the possibility of changes in tax policy and the situation at the frontline remain key factors that could significantly affect Ukraine’s economic development.
Author – Daryna Glushchenko
