The National Bank has released its forecasts for GDP, inflation, and wages through 2028
The National Bank of Ukraine has released a detailed quarterly macroeconomic forecast in its latest “Inflation Report.” Despite a difficult start to the year due to Russian attacks on critical infrastructure and logistics, the financial system remains resilient. The launch of large-scale international aid programs will enable the Ukrainian economy to return to stable growth.
This is according to the National Bank.
GDP Dynamics: From Decline to Recovery
Start of the year: Due to massive Russian airstrikes on the energy sector, ports, and Ukrzaliznytsia hubs, which coincided with winter frosts, Ukraine’s real GDP contracted by 0.5% in the first quarter (according to the State Statistics Service).
Current developments: In the spring, the situation stabilized thanks to warmer weather, repairs, and businesses switching to alternative energy sources.
Sources of growth: The main driver will be financial assistance from partners, particularly the approved EU Ukraine Support Loan program worth €90 billion. These funds will be directed toward defense, reconstruction, and social payments.
Forecast: The NBU expects positive growth to resume as early as the second quarter. By year-end, GDP growth will reach 1.3%, accelerating to 3–4% in 2027–2028.
Labor Market and Real Wage Growth
Shift in migration trends: According to the State Border Guard Service, in the first quarter, the number of citizens entering the country officially exceeded the number of those leaving. On job search websites, the number of new resumes began to grow faster than the number of job openings.
Labor Shortages: The market continues to experience a structural shortage of skilled workers (especially in blue-collar professions). To retain workers, the private sector is raising salaries.
Public sector: Payroll costs have risen due to the revision of the minimum wage and salary increases (particularly for educators).
Forecast: This year, the average real wage (adjusted for inflation) will rise by nearly 12%, and in the coming years it will steadily increase by 6–7% annually.
Inflation Forecast and Price Factors
Current situation: In April, annual inflation stood at 8.6%. The decline in prices has stalled due to the impact of winter weather on the energy sector, the weakening of the hryvnia, rising labor costs, and a surge in global oil and gas prices caused by the conflict in the Middle East.
End of the year: Due to high energy costs, inflation will temporarily accelerate to 9.4%, but the process will remain under control.
Outlook: Prices will subsequently decline thanks to the NBU’s tight monetary policy, the smoothing of exchange rate fluctuations, and increased harvests. Inflation forecast: 6.5% in 2027 and a return to the 5% target in 2028.
Tools for Protecting Savings
To protect citizens’ money from devaluation (with public inflation expectations at 11%), the NBU is keeping the discount rate at 15%. Two main instruments are available on the market, whose returns offset the risks:
Term deposits in hryvnia: Banks offer 15–17% per annum. After taxes, the client’s net return is approximately 12–13%.
Domestic government bonds (OVDP): Yields on government bonds range from 13% to nearly 17% per annum. The main advantage of this instrument is that the income received is fully tax-exempt.
The Cabinet of Ministers of Ukraine, together with international partners and with analytical support from the World Bank, is working to develop a long-term economic strategy. This involves an initiative called “Economy of the Future,” which aims to define key directions for Ukraine’s development, taking into account global economic changes and the country’s investment needs.
As a reminder, Ukraine is experiencing an unprecedented housing shortage, which has reached its highest levels in the country’s history.
