•  Wartime pressures weigh on growth, but resilience supports modest economic expansion
• Real GDP growth picks up in second half of 2025 for a whole-year figure of 2.0 per cent
• Growth forecast at 2.5 per cent in 2026 if the war continues through 2026 

Ukraine is maintaining macroeconomic stability despite Russia’s war on the country, says the latest edition of a flagship economic report by the European Bank for Reconstruction and Development (EBRD). Real GDP growth, slow at the start of the year, picked up strongly to 3.0 per cent by the end of 2025, giving a whole-year figure of 2.0 per cent.

The EBRD’s Regional Economic Prospects (REP), published today, changes the assumption behind its real GDP growth forecast for Ukraine in 2026. Assuming the war continues throughout 2026, the Bank now forecasts that Ukraine’s real GDP will grow by 2.5 per cent this year, rising to 4.0 per cent in 2027. Its previous report had assumed a ceasefire and benefits from post-war reconstruction, allowing it to forecast 2026 growth of 5.0 per cent.

“Supporting the country’s macroeconomic stability is significant, secured and largely frontloaded external financing,” the report says. “While the war continues to impose substantial human and economic costs, Ukraine’s authorities, businesses and partners have demonstrated strong capacity to stabilise the economy under unprecedented conditions.”

Economic performance in 2025 was shaped by major wartime constraints. Power shortages, weaker agricultural output and ongoing labour shortages weighed on growth, while Russia’s targeted attacks on infrastructure created persistent logistical bottlenecks. The trade deficit widened as grain exports declined and temporary European Union (EU) trade preferences ended. Nevertheless, many sectors continued to adapt, reflecting strong resilience and the ability of firms to operate effectively despite disruption.

Real GDP growth remained subdued overall in 2025, although momentum picked up late in the year. The economy expanded by 2.1 per cent year-on-year in the third quarter and 3.0 per cent in the fourth quarter, compared with 0.8 per cent in the first half.

Inflation, elevated at the start of 2025, fell sharply in the second half as tighter monetary policy, easing cost pressures and a stable exchange rate took effect. By January 2026, inflation had eased to 7.4 per cent. The central bank maintained a restrictive stance throughout 2025 before cutting the rate by 50 basis points in January 2026.

Fiscal support remains crucial. Ukraine’s large fiscal deficit is fully financed by external partners, ensuring continuity of public services and defence spending, and contributing to wider macroeconomic stability. Committed external financing of more than €110 billion for 2026-27 is expected to contain short-term risks.

While under the baseline scenario – where Russia’s war on Ukraine continues throughout 2026 – real GDP growth is projected at 2.5 per cent this year, rising to 4.0 per cent in 2027 if the war ends, an early 2026 peace agreement would substantially improve the outlook. However, power shortages, labour constraints and weaknesses in agricultural output continue to pose notable short-term risks.

The EBRD, Ukraine’s largest institutional investor, has significantly increased its support in response to the war. The Bank has made more than €9.0 billion available to Ukraine since the full-scale war began in February 2022, supporting the real economy through its work on energy security, vital infrastructure, food security, trade and the private sector.