The European Bank has downgraded its economic forecast for Ukraine for 2026
The European Bank for Reconstruction and Development has revised downward its forecast for Ukraine’s GDP growth for the current year.
Analysts at the international financial institution note that the protracted nature of the hostilities and systematic strikes on critical infrastructure are placing increasingly heavy pressure on economic activity.
Previously, the bank had forecast GDP growth of 2.5%, but has now lowered its expectations to 2.2%.
Experts cite a critical labor shortage and the destruction of the energy sector as the main destructive factors directly hindering the development of industry, the agricultural sector, and the service sector.
Large-scale emigration and ongoing mobilization efforts have led to a severe structural labor shortage in the labor market.
In addition, regular combined attacks by the Russian army on power generation facilities cause prolonged power outages and significantly increase the production costs of Ukrainian goods.
The bank’s analysts also revised the final figures for the previous period, projecting real economic growth in 2025 at just 1.8%.
Representatives of the financial institution published official calculations in their report and described current trends in detail.
“The country’s economic indicators in 2025 were shaped by the constant constraints of wartime. Labor shortages and constant attacks on energy infrastructure disrupted industrial activity and logistics, while broader supply chain issues limited production. This pressure continued into 2026, resulting in economic growth remaining modest despite the resilience of firms and households,” the report notes.
The onset of another wave of inflation served as an additional negative signal for macroeconomic stability.
After briefly reaching a local low in January 2026, when consumer inflation fell to 7.4% thanks to the NBU’s tight monetary policy, domestic prices in the country once again showed a steady upward trend.
The surge in inflation is fueled by negative external conditions, particularly the escalation of the armed conflict in the Middle East, which has triggered a significant rise in energy prices on global markets.
Despite the significant deterioration in forecasts, the EBRD emphasizes that Ukraine’s macroeconomic framework remains fully under control thanks to unprecedented donor support.
Due to massive defense and social spending, Ukraine’s budget deficit in 2025 reached an astronomical 23.6% of GDP, and in 2026 it will remain at 19.3% of GDP.
Any critical risks to the national currency and financial system are mitigated by a pre-agreed financial assistance package from international partners totaling over 110 billion euros for the 2026–2027 period.
This is reported in the EBRD report.
Ukraine’s GDP fell for the first time in three years — State Statistics Service
Calculations show how Ukraine’s economy grew in 2025
