The outlook is worsening: Dragon Capital expects Ukraine’s economy to slow down in 2026–2027
29 March 01:18
The investment firm Dragon Capital has downgraded its economic outlook for Ukraine for 2026–2027, anticipating a slowdown in growth amid the ongoing war, energy risks, and a labor shortage.
This was reported by Delo.ua, citing the company’s macroeconomic forecast, according to "Komersant Ukrainian".
According to the updated baseline scenario, Ukraine’s real GDP will grow by only 1.5% in 2026 and by 0.5% in 2027. The main constraints will remain the destruction of critical infrastructure, an electricity shortage that could rise to 10%, as well as limited production capacity and a shortage of workers.
At the same time, the defense-industrial complex will become a key driver of the economy, growing thanks to increased funding and support from partners. Agricultural exports will also provide temporary support to the economy in 2026, potentially rising by approximately 30% due to the carryover of part of the harvest.
The company forecasts that inflation in 2026 will fluctuate between 6% and 8% and reach 7.1% by year-end, which is higher than previous estimates. Additional pressure on prices will come from rising fuel costs due to geopolitical tensions in the Middle East.
The trade deficit, according to analysts’ estimates, will rise to $57 billion in 2026, after which it will narrow slightly to $52 billion in 2027. At the same time, external financial support, particularly programs from the International Monetary Fund and aid from the European Union, will help maintain macrofinancial stability and build up international reserves.
Analysts also expect a gradual devaluation of the hryvnia—to 45.5 UAH per dollar in 2026 and to 48 UAH in 2027. Meanwhile, the National Bank will maintain control over the foreign exchange market and take a cautious approach to liberalizing restrictions.
The report also considers an alternative scenario of a lasting ceasefire as early as 2026. In that case, the economy could grow by 3.5% in 2026 and by 5% in 2027; however, even then, growth would be constrained by structural issues—labor shortages and the loss of some production assets.
Overall, Dragon Capital emphasizes that the economy’s future trajectory will depend largely on the security situation, the extent of infrastructure damage, and the duration of hostilities.
