Ukraine's Central Bank downgrades GDP growth forecast to 3.1% in 2025, 3.7% in 2026

Ukraine's National Bank (NBU) has downgraded its GDP growth forecast for 2025 to 3.1%, down from the 3.6% projected in its previous macroeconomic outlook released in January. The forecast for 2026 was also revised downward from 4.0% to 3.7%, and for 2027 – from 4.2% to 3.9%.

"An escalation of global trade confrontations has not yet impacted the Ukrainian economy, but it will slow its recovery later on. Tariff wars will probably lead to a decline in external demand for some of Ukraine's exported goods, although agricultural products will remain in demand even as the global economy cools," the NBU stated in a press release on Thursday.

The central bank noted that GDP growth in the first quarter of 2025 remained sluggish, largely due to the destruction of gas infrastructure, which has led to increased reliance on gas imports. Despite some signs of recovery in the labor market, a significant constraint – according to business surveys – remains the wartime shortage of skilled labor.

Nevertheless, the NBU believes that the 3.1% GDP growth forecast for 2025 will be supported by improved crop yields and a reduction in electricity shortages. These factors, along with a robust volume of defense contracts, are expected to bolster industrial production.

The bank also highlighted that further economic support will come from increased investment in reconstruction, a rebound in manufacturing, and resilient consumer demand.

"Private investment and consumption will offset the effects of fiscal consolidation, which will take place against the backdrop of a decrease in international financial assistance," the release stated.

On March 18, First Deputy Prime Minister, Minister of Economy Yulia Svyrydenko reported that GDP growth for January-February 2025 was estimated at 1.1%.

Earlier, on February 28, the International Monetary Fund (IMF) also revised its forecast for Ukraine's 2025 economic growth downward by 0.5 percentage points, bringing it to a range of 2–3%. Other institutions have followed suit: the European Bank for Reconstruction and Development (EBRD) cut its forecast from 4.7% to 3.5%, the World Bank from 6.5% to 2%, and the NBU itself had previously lowered its forecast from 4.1% to 3.6%. Meanwhile, Ukraine's state budget for 2025 is based on a more conservative growth projection of 2.7%.

Additionally, investment firm ICU revised its own 2025 GDP growth forecast for Ukraine down from 3.4% to 3.0%.